PLIANT THERAPEUTICS, INC. 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 84 Balance Sheets 86 Statements of Operations and Comprehensive Loss 87 Statements of Stockholders’ Equity 88 Statements of Cash Flows 89 Notes to Financial Statements 90 83 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Pliant Therapeutics, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Pliant Therapeutics, Inc. (the "Company") as of December 31, 2025 and 2024, the related statements of operations and comprehensive loss, stockholders' equity, and cash flows, for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Accrued Research and Development and Prepaid Expenses and Other Current Assets – Accrued and Prepaid Research and Development Expenses related to Contract Research Organizations (CROs) — Refer to Notes 2 and 5 to the financial statements Critical Audit Matter Description The Company records accrued expenses for costs of research and development activities which include the conduct of clinical studies by third-party CRO service providers, based upon the estimated amount of services provided but not yet invoiced. Any payments made in advance of services provided are recorded as prepaid assets, which are expensed as the contracted services are performed. The Company estimates the amount of work completed through the review of detailed budgets and timelines included in its contracts and agreements and updates these estimates with information obtained from third-party service providers and internal personnel on a quarterly basis. Given the significant judgments made by management in estimating the progress or stage of completion of the services, auditing the Company’s accrued and prepaid research and development expenses related to CROs was especially challenging. Specifically, because the amount of accrued and prepaid research and development expenses is dependent on management’s receipt of timely and accurate reporting from third-party service providers, management’s estimates of work completed as of the balance sheet date, and management’s estimates of the period over which this work will be performed, auditing accrued and prepaid research and development expenses related to CROs required a high degree of auditor judgment and an increased extent of effort. 84 How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s accrued and prepaid research and development expenses related to CROs included the following, among others: • For a sample of agreements and contracts, we read the related statement of work, purchase order, and inspected information the Company received from its third-party service providers. We tested the accuracy and completeness of the underlying information used in the estimates and evaluated the significant assumptions that are used by management to estimate the recorded amounts by performing the following procedures: ◦ Performed corroborating inquiries with the Company’s research and development personnel that oversee the CRO’s studies to obtain information regarding the nature and extent of progress of the clinical studies. ◦ Obtained written confirmations directly from the Company’s third-party service providers regarding the accuracy and completeness of contracted amounts and percentage of completion. ◦ Evaluated management’s judgments using the evidence obtained. ◦ For a sample of agreements and contracts, we obtained the corresponding invoices and evidence of payment to test the Company’s disbursements made to third-party service providers as of December 31, 2025. • We compared invoices received by the Company subsequent to December 31, 2025, to the accrued research and development expenses related to CROs recognized by the Company as of that date. /s/ Deloitte & Touche LLP San Francisco, California March 11, 2026 We have served as the Company's auditor since 2018. 85 Pliant Therapeutics, Inc. Balance Sheets (In thousands, except number of shares and per share amounts) December 31, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 45,445 $ 71,188 Short-term investments 145,499 284,536 Prepaid expenses and other current assets (Note 5) 4,464 6,540 Property and equipment held for sale (Note 4) 1,040 — Total current assets 196,448 362,264 Property and equipment, net (Note 4) 2,940 5,525 Operating lease right-of-use assets 23,966 27,243 Restricted cash 1,482 1,482 Other non-current assets 392 435 Total assets $ 225,228 $ 396,949 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 480 $ 5,960 Accrued research and development 4,804 14,363 Accrued liabilities (Note 6) 9,634 12,353 Lease liabilities, current 1,447 542 Total current liabilities 16,365 33,218 Lease liabilities, non-current 27,658 29,439 Long-term debt (Note 7) — 30,211 Total liabilities 44,023 92,868 Commitments and Contingencies (Note 14) Stockholders’ equity Preferred stock, $ 0.0001 par value 10,000,000 shares authorized at December 31, 2025 and 2024, none issued or outstanding at December 31, 2025 and 2024 — — Common stock, $ 0.0001 par value; 300,000,000 shares authorized at December 31, 2025 and 2024; and 61,449,290 and 60,860,838 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively; 6 6 Additional paid-in capital 1,040,610 1,013,806 Accumulated deficit ( 859,396 ) ( 710,052 ) Accumulated other comprehensive (loss) gain ( 15 ) 321 Total stockholders’ equity 181,205 304,081 Total liabilities and stockholders’ equity $ 225,228 $ 396,949 The accompanying notes are an integral part of these financial statements. 86 Pliant Therapeutics, Inc. Statements of Operations and Comprehensive Loss (In thousands, except number of shares and per share amounts) Year Ended December 31, 2025 2024 Revenue $ — $ — Operating expenses: Research and development ( 109,157 ) ( 169,310 ) General and administrative ( 47,216 ) ( 59,055 ) Total operating expenses ( 156,373 ) ( 228,365 ) Loss from operations ( 156,373 ) ( 228,365 ) Interest and other income (expense), net 11,416 21,085 Interest expense ( 2,559 ) ( 3,024 ) Loss on extinguishment of debt (Note 7) ( 1,828 ) — Net loss $ ( 149,344 ) $ ( 210,304 ) Net loss per share - basic and diluted $ ( 2.43 ) $ ( 3.47 ) Weighted average shares used in computing net loss per share - basic and diluted 61,366,887 60,538,639 Comprehensive loss: Net loss $ ( 149,344 ) $ ( 210,304 ) Net unrealized loss on short-term investments ( 336 ) ( 24 ) Total other comprehensive loss ( 336 ) ( 24 ) Comprehensive loss $ ( 149,680 ) $ ( 210,328 ) The accompanying notes are an integral part of these financial statements. 87 Pliant Therapeutics, Inc. Statements of Stockholders’ Equity (In thousands, except number of shares and per share amounts) Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Gain Accumulated Deficit Total Stockholders' Equity Common Stock Shares Amount Balance at December 31, 2023 59,921,002 $ 6 $ 972,973 $ 345 $ ( 499,748 ) $ 473,576 Issuance of common stock under benefit plans 939,836 — 3,207 — — 3,207 Stock-based compensation expense — — 37,626 — — 37,626 Net unrealized loss on short-term investments — — — ( 24 ) — ( 24 ) Net loss — — — — ( 210,304 ) ( 210,304 ) Balance at December 31, 2024 60,860,838 $ 6 $ 1,013,806 $ 321 $ ( 710,052 ) $ 304,081 Issuance of common stock under benefit plans 588,452 — 570 — — 570 Stock-based compensation expense — — 26,234 — — 26,234 Net unrealized loss on short-term investments — — — ( 336 ) — ( 336 ) Net loss — — — — ( 149,344 ) ( 149,344 ) Balance at December 31, 2025 61,449,290 $ 6 $ 1,040,610 $ ( 15 ) $ ( 859,396 ) $ 181,205 The accompanying notes are an integral part of these financial statements. 88 Pliant Therapeutics, Inc. Statements of Cash Flows (In thousands) Year Ended December 31, 2025 2024 Cash flows from operating activities Net loss $ ( 149,344 ) $ ( 210,304 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 1,696 2,125 Stock-based compensation expense 26,234 37,626 Gain on sale of property plant and equipment ( 44 ) — Non-cash operating lease expense 3,277 3,451 Amortization (accretion) on short-term investments 3,956 2,510 Loss on extinguishment of debt 1,828 — Changes in operating assets and liabilities: Prepaid expenses and other current assets 2,541 4,717 Other non-current assets 43 ( 43 ) Accounts payable ( 5,480 ) 1,428 Accrued liabilities ( 12,167 ) 3,807 Operating lease liabilities ( 876 ) ( 820 ) Net cash used in operating activities ( 128,336 ) ( 155,503 ) Cash flows from investing activities Purchase of short-term investments ( 203,404 ) ( 211,285 ) Maturity of short-term investments 337,913 355,473 Purchase of property and equipment ( 374 ) ( 3,848 ) Proceeds from sale of property, plant and equipment 155 — Net cash provided by investing activities 134,290 140,340 Cash flows from financing activities Proceeds from issuances of common stock under benefit plans 570 3,207 Payment of debt ( 32,267 ) — Proceeds from term loan, net of issuance costs — 19,910 Net cash (used in) provided by financing activities ( 31,697 ) 23,117 Net (decrease) increase in cash and cash equivalents ( 25,743 ) 7,954 Cash, cash equivalents and restricted cash at beginning of period 72,670 64,716 Cash, cash equivalents and restricted cash at end of period $ 46,927 $ 72,670 Supplemental disclosures of cash flow information: Cash paid for interest $ 2,539 $ 2,620 Reconciliation of cash, cash equivalents, and restricted cash reported in the balance sheets Cash and cash equivalents $ 45,445 $ 71,188 Restricted cash 1,482 1,482 Total cash, cash equivalents, and restricted cash shown in the statements of cash flows $ 46,927 $ 72,670 Supplemental disclosures of noncash investing and financing activities: Purchase of property and equipment in accounts payable $ 112 $ 236 Supplemental disclosures of cash flow information related to leases: Cash paid for operating lease liabilities in operating cash flows $ 5,562 $ 4,698 Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ 29,779 The accompanying notes are an integral part of these financial statements. 89 Pliant Therapeutics, Inc. Notes to Financial Statements 1. Organization and Description of Business Pliant Therapeutics, Inc. (the “Company” or "Pliant" or “we” or “our” or “us”) is a clinical-stage biopharmaceutical company focused on discovering and developing integrin-based therapeutics. Our lead program is focused on the development of treatments for solid tumors by inhibiting integrin-mediated activation of transforming growth factor-β (TGF-β) and we also continue to explore the full potential of our drug discovery platform consisting of a proprietary library of over 15,000 integrin binding molecules, focusing on integrin-based target-mediated drug delivery. The Company is located in South San Francisco, California, and was incorporated in the state of Delaware in June 2015. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses as well as the disclosure of contingent assets and liabilities in the financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, accruals for research and development costs, fair value of assets, stock-based compensation, income taxes and uncertain tax positions. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances, however, actual results may differ from those estimates. Fair Value Measurements The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which to transact and the market-based risk. Fair value accounting is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The carrying amount of the Company’s financial instruments, including cash and cash equivalents, tax credit receivable, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities approximate fair value due to their short-term maturities. Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, short-term investments and accounts receivable. The Company invests in Money Market Funds, United States (“U.S.”) Treasury securities, government notes and corporate debt securities. The Company limits its credit risk associated with its cash and cash equivalents by placing them with banks and institutions it believes are highly credit worthy and in highly rated investments. However, the Company had deposits in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limit of $250,000. The Company performs credit evaluations of its customer, and the risk with respect to accounts receivable is further mitigated by the short duration of customer payment terms, generally within 60 days, and the pedigree of the customer base. During the year ended December 31, 2025 and 2024, the Company had no revenue or accounts receivable. The Company’s future results of operations involve several other risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s product candidates, uncertainty of market acceptance of the Company’s product candidates, competition from substitute products, including those that may be developed or marketed by larger companies, securing and protecting intellectual property, strategic relationships and dependence on key individuals and sole source suppliers. The Company’s product candidates require approvals from the U.S. Food and Drug Administration (“FDA”) and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company is denied approval, approval is 90 delayed or the Company is unable to maintain approval for any product candidate, it can have a materially adverse impact on the Company. Segment The Company operates and manages its business as one reportable and operating segment, which is the business of developing and commercializing novel integrin-based therapies. The Company’s chief executive officer, who is the chief operating decision maker ("CODM"), reviews financial information on an aggregate basis for allocating and evaluating financial performance; however, our CODM is regularly provided with more detailed expense information than what is included in our Statement of Operations and Comprehensive Loss. See Note 13 for further details. The single operating segment constitutes all of the Company activity, the chief operating decision maker regularly reviews the entity-wide operating results and performance . All long-lived assets are maintained in the United States of America. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist of amounts invested in money market funds and are stated at fair value. Restricted Cash Our restricted cash balance of $ 1.4 million as of December 31, 2025 and 2024 represented cash required to be held as collateral by a financial institution to guarantee lease payments due to our landlord at Oyster Point Blvd, South San Francisco, California (the "Oyster Point Lease"). Short-Term Investments The Company’s short-term investments consist of U.S. Treasury securities, U.S. government agency securities and corporate debt securities with remaining maturities beyond three months at the date of purchase. The Company has classified and accounted for its short-term investments as available-for-sale securities as the Company may sell these securities at any time even prior to maturity and such investments represent cash available for current operations. As a result, short-term investments may include securities with maturities beyond twelve months that are classified within current assets in the Balance Sheets. As of December 31, 2025 and 2024, all of the Company’s short-term investments were classified as available-for-sale and were carried at fair market value with unrealized losses recorded in other comprehensive (loss) gain in the statements of operations and comprehensive loss. See Note 3 for further details. The Company records an allowance for credit losses using an expected loss model. Credit losses are limited to the amount by which the amortized cost of an investment exceeds its fair value. A previously recognized credit loss may be decreased in subsequent periods if the Company’s estimate of fair value for the investment increases. To determine whether to record a credit loss, the Company considers issuer specific credit ratings and historical losses as well as current economic conditions and its expectations for future economic conditions. The Company has not recorded any credit losses during the years ended December 31, 2025 and 2024. Property and Equipment, Net Property and equipment are recorded at cost net of accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets. The useful lives of property and equipment are as follows: Laboratory equipment 5 years Computer equipment and software 3 years Leasehold improvements Shorter of remaining lease term or estimated useful life Upon retirement or sale of the assets, the cost and related accumulated depreciation and amortization are removed from the balance sheets and the resulting gain or loss is recorded to the statements of operations and comprehensive loss. Repairs and maintenance are expensed as incurred. Leases The Company determines if an arrangement contains a lease at the inception of the contract and a records right-of-use (“ROU”) asset and lease liability on the balance sheet at lease commencement based on the present value of remaining lease payments over the lease term. The Company only considers payments that are fixed and determinable at the time of commencement. 91 For leases with an initial term greater than 12 months, lease liabilities are recognized based on the present value of the future minimum lease payments discounted by the Company’s estimated incremental borrowing rate. The Company measures ROU assets based on the corresponding lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred and (iii) tenant incentives under the lease. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company calculates the present value of future minimum lease payments using its estimated incremental borrowing rate when the discount rate implicit in the lease is not known. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. In determining its incremental borrowing rate, the Company gives consideration to its credit risk, term of the lease, total lease payments and an analysis of peer companies with profiles similar to its own. The Company has elected the short-term lease practical expedient to exclude leases with a term less than 12 months from its ROU assets and lease liabilities. The Company records rent expense for short-term leases in its statements of operations on a straight-line basis over the lease term and records variable lease payments as incurred. The Company has also elected to not separate lease and non-lease components and, as a result, accounts for any lease and non-lease components as a single lease component. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. There was no impairment of long-lived assets during the years ended December 31, 2025 and 2024. Research and Development Expenses Research and development costs are expensed as incurred. Research and development expenses consist primarily of personnel costs for the Company’s research and development employees. Also included are non-personnel costs such as fees paid to consultants and third parties for preclinical and clinical studies, research and development services, laboratory supplies and equipment maintenance costs, license costs, contract manufacturing costs and allocations of facility related costs. The Company estimates preclinical and clinical studies and research expenses based on the services performed, pursuant to contracts with research institutions that conduct and manage preclinical and clinical studies and research services on its behalf. We estimate the amount of work completed through review of detailed budgets and timelines included in our contracts and agreements, and update these estimates with information obtained from third-party service providers and internal personnel on a quarterly basis. If the actual timing of the performance of services or the level of effort varies from the original estimates, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the performance of the related services are recorded as prepaid expenses and are expensed as services are rendered. Payments associated with licensing agreements to acquire exclusive licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternate commercial use are expensed as incurred. Stock-Based Compensation The Company’s stock-based equity awards include restricted stock awards, stock options, restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs"), issued under the Company's 2020 Stock Option and Incentive Plan (the "2020 Plan"), 2022 Inducement Plan ("Inducement Plan") and shares issued under the Company’s 2020 Employee Stock Purchase Plan ("ESPP"). Stock-based compensation for awards that are granted to employees is accounted at fair value on the award grant date and the expense is recognized over the period the employee is required to provide service in exchange for the award, which is generally on a straight-line basis over the vesting period of the award. The expense is recorded in either research and development or general and administrative expenses in the statements of operations and comprehensive loss based on the function to which the related services are provided. Forfeitures are accounted for as they occur. The Company utilizes the Monte Carlo simulation model with significant inputs including volatility and closing price of stock on grant for estimating the fair value of equity awards with market-based vesting conditions and uses the closing price of common stock on the date of grant for PSUs and RSUs with a performance or service-based vesting condition. 92 The Black-Scholes option-pricing model, used to estimate fair value of stock options with service-based vesting conditions, requires the use of the following assumptions: • Expected term —The expected term represents the period that the stock-based awards are expected to be outstanding. The expected term for the Company’s stock options was calculated utilizing the simplified method, which represents the average of the weighted-average vesting term and the contract period of the awards. The expected term for the ESPP is the offering period. • Expected volatility —Prior to the Company being public, the Company did not have any trading history for its common stock, the expected volatility was estimated based on the average historical volatilities of common stock of comparable publicly traded entities over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on their size, stage in the life cycle or area of specialty. As the Company went public in June 2020, the Company will continue to apply this process for stock options and ESPP awards until enough historical information regarding the volatility of its stock price becomes available. • Risk-free interest rate —The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the awards. • Expected dividend —The Company has never paid dividends on the common stock and has no plans to pay dividends on the common stock. Therefore, the Company used an expected dividend yield of zero . Income Taxes The Company provides for income taxes under the asset and liability method. Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year. Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax basis of assets and liabilities and net operating loss and credit carryforwards and are measured using the enacted tax rates and laws that will be in effect when such items are expected to reverse. Deferred income tax assets are reduced, as necessary, by a valuation allowance when management determines it is more likely than not that some or all the tax benefits will not be realized. The Company accounts for uncertain tax positions in accordance with ASC 740 , Income Taxes . The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. The Company includes any penalties and interest expense related to income taxes as a component of income tax expense, as necessary. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders' equity that result from transactions and economic events other than those with stockholders. The Company's comprehensive gain (loss) represents unrealized losses and gains on short-term investments. Interest and other income (expense) Interest and other income (expense) includes interest income from our short-term investment portfolio. Net Loss Per Share Basic net loss per share is computed by dividing net loss attributed to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period and, if dilutive, the weighted-average number of potential shares of common stock. Common stock equivalent shares are excluded from the computation of diluted net loss or income per share if their effect is antidilutive. In periods in which the Company reports a net loss attributable to common stockholders, diluted net 93 loss per share attributable to common stockholders is generally the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is antidilutive. The Company reported a net loss attributable to common stockholders during the years ended December 31, 2025 and 2024. Recently Adopted Accounting Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07 “Segment Reporting - Improvements to Reportable Segment Disclosures”, which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. The guidance is effective for the Company's annual periods beginning in 2024 and interim periods beginning in the first quarter of fiscal year 2025. The Company adopted the standard on December 31, 2024. The adoption of this standard did not have a material impact on the Company's financial statements. See Note 13, Segment, for the updated segment disclosures as a result of adopting this ASU. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires disclosure of additional categories of information about federal, state and foreign income taxes in the rate reconciliation table and more details about the reconciling items in some categories if items meet a quantitative threshold. The ASU requires entities to disclose income taxes paid, net of refunds, disaggregated by federal (national), state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted. The Company adopted this standard on December 31, 2025. The adoption of this standard did not have a material impact on the Company's financial statements. See Note 12, Income Taxes, for the updated income taxes disclosures as a result of adopting this ASU. Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03 “Disaggregation of Income Statement Expenses,” which aims to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. The guidance is effective for the Company's annual periods beginning in 2027 and interim periods beginning in the first quarter of fiscal year 2028. The Company is currently evaluating the impact of the new guidance. 3. Financial Instruments The Company’s short-term investments consist of U.S. Treasury securities, U.S. Government agency securities and highly rated, investment-grade corporate debt securities with original maturities beyond three months at the date of purchase. The Company has classified and accounted for its short-term investments as available-for-sale securities as the Company may sell these securities at any time even prior to maturity and such investments represent cash available for current operations. As a result, short-term investments may include securities with maturities beyond twelve months that are classified within current assets in the Balance Sheets. The Company’s short-term investments classified as available-for-sale are carried at fair market value with unrealized gain or loss recognized in other comprehensive gain (loss). Assets and liabilities recorded at fair value on a recurring basis in the Balance Sheets and assets and liabilities measured at fair value on a non-recurring basis or disclosed at fair value, are categorized based upon the level of judgment associated with inputs used to measure their fair values. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Accounting guidance establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows: • Level 1 —Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; • Level 2 —Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and • Level 3 —Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data. The fair value of the Company’s cash equivalent Money Market Funds are classified as Level 1 because they are valued using quoted market prices. The fair value of the Company’s U.S. Treasury securities, U.S. government agency 94 securities and corporate debt securities are classified as Level 2 because they are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. These Level 2 instruments require more management judgment and subjectivity compared to Level 1 instruments which include determining which instruments are most similar to the instrument being priced, determining whether the market is active and determining which model-derived valuations are to be used when calculating fair value. The Company performs its analysis with the assistance of investment advisors. There were no assets or liabilities recorded at fair value using Level 3 inputs as of December 31, 2025 and 2024. The following tables show the Company’s cash and cash equivalents and short-term investments by significant investment category as of December 31, 2025 and 2024 (in thousands): As of December 31, 2025 As of December 31, 2024 Adjusted Cost Unrealized Gains Unrealized Losses Market Value Adjusted Cost Unrealized Gains Unrealized Losses Market Value Money Market Funds Level 1 $ 24,811 $ — $ — $ 24,811 $ 54,825 $ — $ — $ 54,825 U.S. Treasury securities Level 2 8,064 2 ( 1 ) 8,065 9,968 7 — 9,975 U.S. Government Agency Securities Level 2 1,001 — — 1,001 77,769 235 — 78,004 Corporate debt securities Level 2 139,941 26 ( 42 ) 139,925 196,479 160 ( 82 ) 196,557 Total financial assets $ 173,817 $ 28 $ ( 43 ) $ 173,802 $ 339,041 $ 402 $ ( 82 ) $ 339,361 As of December 31, 2025 As of December 31, 2024 Classified as: Adjusted Cost Unrealized Gains Unrealized Losses Market Value Adjusted Cost Unrealized Gains Unrealized Losses Market Value Cash equivalents $ 28,303 $ — $ — $ 28,303 $ 54,825 $ — $ — $ 54,825 Short-term investments 145,514 28 ( 43 ) 145,499 284,216 402 ( 82 ) 284,536 Total $ 173,817 $ 28 $ ( 43 ) $ 173,802 $ 339,041 $ 402 $ ( 82 ) $ 339,361 The Company may sell certain of its short-term securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation. The following summarizes the remaining contractual maturities of the Company’s short-term investments as of December 31, 2025 (in thousands): Adjusted Cost Market Value Mature in 1 year or less $ 115,920 $ 115,926 Mature in 1 to 2 years 29,594 29,573 Total $ 145,514 $ 145,499 There were no liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024. There have been no transfers between fair value measurement levels during the years ended December 31, 2025 and 2024. In addition, there were no assets or liabilities measured at fair value on a non-recurring basis as of December 31, 2025 and 2024. The Company records interest income and accretion income earned on Money Market Funds and U.S. Treasury, U.S. government agency and corporate debt securities to interest and other income (expense), net in its statement of operations and comprehensive loss. 95 4. Property and Equipment, net Property and equipment, net consisted of the following (in thousands): December 31, 2025 2024 Laboratory equipment $ 8,563 $ 10,988 Leasehold improvements 2,156 2,118 Furniture and Fixture 1,832 1,775 Computer equipment and software 1,105 1,105 Construction-in-progress 153 346 Total property and equipment, gross 13,809 16,332 Less: Accumulated depreciation ( 10,869 ) ( 10,807 ) Total property and equipment, net $ 2,940 $ 5,525 Depreciation expense during the years ended December 31, 2025 and 2024 was $ 1.7 million and $ 2.1 million, respectively. In the fourth quarter of 2025, the Company committed to a plan to sell certain laboratory equipment that was no longer required following the restructuring of operations initiated May 1, 2025. Management determined that the asset met the criteria for classification as held for sale in accordance with ASC 360, "Property, Plant and Equipment." The Company intends to divest these assets as part of their strategic realignment of resources, focusing on the development of PLN-101095 and the drug discovery platform. The assets were measured at the lower of their carrying value or fair value less cost to sell, and reclassified to "Property and equipment held for sale" within current assets on the Balance Sheets as of December 31, 2025. Depreciation ceased to be recognized on the assets after the date of its held-for-sale classification. December 31, 2025 2024 Laboratory equipment held for sale $ 1,040 $ — Impairment loss recognized — — Total property and equipment held for sale, net $ 1,040 $ — 5. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): December 31, 2025 2024 Prepaid research and development $ 2,114 $ 2,101 Prepaid insurance 672 877 Prepaid licenses 763 1,097 Interest receivable 823 2,302 Other 92 163 Total prepaid expenses and other current assets $ 4,464 $ 6,540 6. Accrued Liabilities Accrued liabilities consisted of the following (in thousands): December 31, 2025 2024 Accrued compensation and benefits $ 8,298 $ 11,154 Other accrued liabilities 1,336 1,199 Total accrued liabilities $ 9,634 $ 12,353 96 Accrued compensation and benefits consist primarily of accrued bonuses, accrued restructuring cost and accrued vacation. 7. Debt In May 2022, as amended in October 2022, we entered into a term loan facility (the “Oxford Loan Agreement”) with Oxford Finance LLC (the "Lender") for up to $ 100.0 million. In connection with the Oxford Loan Agreement, we granted a security interest in substantially all of our current and future assets. At closing, we entered into a term loan for $ 10.0 million and we decided not to draw upon the additional $ 65.0 million that became available to us over the course of 2023 as certain conditions related to the development of bexotegrast and one of our preclinical product candidates were satisfied. As of December 31, 2023, the time period to draw upon the additional $ 65.0 million had lapsed. On March 11, 2024, we entered into an Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”) with the Lender to borrow a series of term loans up to an aggregate principal amount of $ 150.0 million (the “Term Loans”), of which $ 50.0 million is subject to the Lender’s sole discretion. Pursuant to the Amended Loan Agreement, we drew an initial Term Loan of $ 30.0 million, inclusive of $ 10.0 million in principal amount previously outstanding under the Oxford Loan Agreement. Under the agreement, additional borrowing of up to an additional $ 70.0 million of Term Loans would be available at our option, $ 35.0 million being available commencing October 1, 2025 contingent upon the continued operation of the BEACON-IPF study and a further $ 35.0 million being available upon demonstrating that BEACON-IPF had achieved positive Phase 2b data sufficient to support continued development, in the sole discretion of Oxford. The principal amount outstanding under the Term Loans accrued interest at a floating per annum rate equal to (i) the greater of (a) 1-month term Chicago Mercantile Exchange (“CME”) Term Secured Overnight Financing Rate (“SOFR”) on the last business day of the month that immediately precedes the month in which the interest will accrue and (b) three and one-half percent ( 3.50 %) plus (ii) five and one-quarter percent ( 5.25 %). On October 14, 2025, the Company made a full voluntary prepayment of $ 32.4 million and recorded a loss on extinguishment of debt of $ 1.8 million, representing the difference between the prepayment amount and the carrying value of debt including accrued interest as of the extinguishment date. Upon prepayment, the term loan, related security interests, and all other obligations, covenants, debts and liabilities under the Amended Loan Agreement were satisfied and discharged in full and the Amended Loan Agreement and all other documents entered into in connection with the Amended Loan Agreement were terminated. The effective interest rate for the term loan through the prepayment date was 10.64 % and 11.51 % for the year ended December 31, 2025 and 2024, respectively. Interest expense during the years ended December 31, 2025 and 2024 was $ 2.5 million and $ 3.0 million, respectively. 8. Preferred Stock Under the Company’s Amended and Restated Certificate of Incorporation, the Company is authorized to issue two classes of shares: preferred stock and common stock. The preferred stock may be issued in series, and the Company’s board of directors is authorized to determine the rights, preferences, and terms of each series. These rights, preferences and terms could include dividend rights, conversion rights, voting rights, terms of redemptions, liquidation preferences and sinking fund terms. As of December 31, 2025 and 2024, the Company was authorized to issue 10,000,000 shares of preferred stock and there was no preferred stock outstanding as of December 31, 2025 and 2024. 9. Common Stock As of December 31, 2025 and 2024, the Company had 300,000,000 authorized shares of common stock, at a par value of $ 0.0001 per share. The common stock has the following rights and privileges: Voting The holders of shares of common stock are entitled to one vote for each share of common stock held at any meeting of stockholders and at the time of any written action in lieu of a meeting. Dividends The holders of shares of common stock are entitled to receive dividends, when declared by the Company’s Board of Directors. Cash dividends may not be declared or paid to holders of shares of common stock until all unpaid dividends on the Preferred Stock have been paid in accordance with their terms. No dividends have been declared or paid by the Company since its inception. 97 Liquidation The holders of shares of common stock are entitled to share ratably in the Company’s remaining assets available for distribution to its stockholders in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or upon occurrence of a deemed liquidation event. Shares reserved for future issuance December 31, 2025 2024 Outstanding stock options 7,456,066 8,300,804 Vesting of RSUs 858,247 932,634 Shares of common stock available for future grants under the 2020 Stock Option and Incentive Plan 7,832,167 4,212,229 Shares of common stock available for future issuance under the 2020 ESPP 1,692,136 1,294,745 Shares of common stock available for future issuance under the 2022 Inducement Plan 1,425,000 1,460,000 Total shares reserved for future issuance 19,263,616 16,200,412 10. Stockholder Rights Agreement On March 12, 2025, the Company's board of directors adopted the Rights Plan and declared a dividend of one right (each, a “Right”) for each outstanding share of our common stock to stockholders of record at the close of business on March 25, 2025. Each Right entitles its holder, subject to the terms of the Rights Plan, to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $ 0.0001 per share, of the Company at an exercise price of $ 12.64 per Right, subject to adjustment. The description and terms of the Rights are set forth in the Rights Plan, dated as of March 12, 2025, by and between the Company and Computershare Trust Company, N.A., a federally chartered trust company, as rights agent. Subject to certain exceptions, Rights become exercisable and trade separately from our common stock only upon the earlier of (i) the close of business on the tenth business day following the public announcement of an Acquiring Person (as defined in the Rights Plan) beneficially owning 20 %, when referring to a passive investor, and 10 %, when referring to a person that is not a passive investor, or more of our common stock, and (ii) the close of business on the tenth business day after the commencement of a tender offer or exchange offer that, if consummated, would result in a person or group becoming an Acquiring Person. On March 3, 2026, the Company entered into an Amendment to the Stockholder Rights Agreement to extend the expiration time of the Rights for one year from March 11, 2026 to March 11, 2027, unless the Rights are earlier redeemed, exchanged, or terminated in accordance with the terms and conditions of the Rights Agreement. The Rights Plan is intended to reduce the likelihood that any entity, person or group is able to gain control of the Company through open market accumulation without paying all stockholders an appropriate control premium or providing the board of directors sufficient opportunity to make informed judgments and take actions that are in the best interests of the Company and all stockholders. The Rights Plan is not intended to interfere with any merger or other business combination approved by the board of directors. 11. Stock-Based Compensation Equity Incentive Plans In 2015, the Company's Board of Directors adopted the 2015 Equity Incentive Plan, as amended in 2018, 2019 and 2020 (the “2015 Plan”), which provided for the grant of incentive stock options, nonqualified stock options or other awards including stock appreciation rights and restricted stock awards to the Company’s employees, officers, directors, advisors, and consultants. In May 2020, the Board of Directors adopted the 2020 Stock Option and Incentive Plan (the “2020 Plan”) and suspended the 2015 Plan. Awards outstanding under either the 2015 Plan or 2020 Plan that are cancelled, expire or otherwise terminated subsequent to May 2020 will become available for issuance as common stock under the 2020 Plan. Additionally, the 2020 Plan is subject to automatic increases on January 1 of each year beginning January 1, 2021. The number of shares added each January 1 will be equal to the lesser of: (i) 5 % of the outstanding shares on the immediately preceding December 31 or (ii) such amount as determined by the compensation committee of the Board of Directors. The 2020 Plan provides for the grant of incentive stock options, nonqualified stock options or other awards including stock appreciation rights, restricted stock awards and restricted stock units to the Company’s employees, officers, directors, advisors and consultants. As of December 31, 2025, the 2020 Plan had 7,832,167 shares of common stock available for future issuance. 98 In 2022, the Board of Directors adopted the 2022 Inducement Plan ("Inducement Plan"), under which the Company may grant nonqualified stock options or other awards including stock appreciation rights and restricted stock awards. As of December 31, 2025, 1,425,000 shares of common stock were available for issuance. Options under the 2020 Plan and Inducement Plan may be granted for periods of up to 10 years and at prices no less than the market price of the Company’s common stock on the date of grant, provided, however, that the exercise price of an incentive stock option granted to a 10 % shareholder shall not be less than 110 % of the fair value of the shares on the date of grant and the option is not exercisable after the expiration of five years from the date of grant. Incentive Stock Options and Nonqualified Stock Options Stock options issued under either the 2015 Plan, the 2020 Plan or the Inducement Plan generally vest over four years and expire ten years from the date of grant. Certain options provide for accelerated vesting if there is a change in control, as defined in the respective plans. The Company used Black-Scholes option pricing model to estimate stock-based compensation expense for stock option awards with the following assumptions: Year Ended December 31, 2025 2024 Min Max Min Max Expected volatility 86.82 % 89.30 % 85.02 % 88.02 % Risk-free interest rate 3.98 % 4.45 % 3.45 % 4.60 % Expected dividend — — — — Expected term (in years) 5.34 6.08 5.31 6.08 Underlying common stock fair value $ 1.37 $ 12.63 $ 11.09 $ 17.44 A summary of option activity under the 2015 Plan, 2020 Plan and Inducement Plan is as follows: Number of Options Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2024 8,300,804 $ 17.23 7.5 $ 13,769 Granted 2,271,680 $ 9.68 Exercised ( 4,921 ) $ 12.18 Forfeited ( 3,111,497 ) $ 16.40 Outstanding as of December 31, 2025 7,456,066 $ 15.28 5.6 $ — Exercisable as of December 31, 2025 5,305,752 $ 15.98 4.8 $ — Vested and expected to vest as of December 31, 2025 7,456,066 $ 15.28 5.6 $ — As of December 31, 2025, there was $ 18.8 million of unrecognized compensation costs that is expected to be recognized over the weighted-average periods of 2.3 years related to stock options. The total intrinsic value of stock options exercised was $ 5 thousand, and $ 1.9 million for December 31, 2025, and 2024, respectively. Intrinsic value represents the difference between the current fair value of the underlying stock and the exercise price of the stock option at the respective balance sheet dates. The weighted-average grant date fair value of options granted during the years ended December 31, 2025, and 2024 was $ 7.25 and $ 15.00 per share, respectively. 99 Restricted Stock Units The service-based condition for restricted stock units ("RSUs") is satisfied over three years . The following table sets forth the outstanding RSUs and related activity for the year ended December 31, 2025: Restricted Stock Units Weighted Average Grant Date Fair Value Unvested and outstanding as of December 31, 2024 932,634 $ 24.28 Granted 840,341 $ 10.67 Released ( 372,313 ) $ 26.02 Forfeited ( 542,415 ) $ 15.04 Unvested and outstanding as of December 31, 2025 858,247 $ 16.04 As of December 31, 2025, the Company had $ 5.8 million of unrecognized stock-based compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of 1.5 years. Performance-Based Restricted Stock Units In July 2022 the Company granted performance-based restricted stock units ("PSUs") that vested upon the achievement of market and performance conditions. Market conditions included the Company's total shareholder return ("TSR") relative to the NASDAQ Biotechnology Index over the term of the award ending on June 30, 2024, and performance conditions consisted of multiple clinical development milestones associated with bexotegrast. The PSUs associated with clinical development milestones vested in 2023 and the market-based PSUs vested at 55 % of their target in 2024. Stock based compensation associated with PSUs was nil for the twelve months ended December 31, 2025 and $ 1.3 million for the twelve months ended December 31, 2024. There were no PSUs outstanding as of December 31, 2025 and 2024. 2020 Employee Stock Purchase Plan In June 2020, the Company adopted the 2020 Employee Stock Purchase Plan (the "2020 ESPP") and reserved 700,000 shares of common stock for future issuance under the plan. The 2020 ESPP is subject to automatic increases on January 1 of each calendar year, beginning January 1, 2021, by the lesser of (i) 1 % of the outstanding shares on the immediately preceding December 31, (ii) 700,000 shares or (iii) such lesser amount as determined by, the compensation committee of the Board of Directors. Under the 2020 ESPP, eligible employees may purchase shares of our common stock through payroll deductions that cannot exceed 15 % of the employee’s salary. The 2020 ESPP provides for a six-month offering period. At the end of the purchase period, eligible employees are permitted to purchase shares of common stock at the lower of 85 % of the fair market value at the beginning or end of the offering period subject to tax limitations on the total value of the purchase. The 2020 ESPP is considered a compensatory plan, and the Company recorded $ 0.2 million, and $ 0.5 million in stock-based compensation expense for years ended December 31, 2025, and 2024, respectively. During the years ended December 31, 2025, and 2024, 211,218 shares, and 110,222 shares, respectively, of common stock were issued under the 2020 ESPP. The Company used the Black-Scholes option pricing model to estimate stock-based compensation expense for the 2020 ESPP with the following assumptions: Year Ended December 31, 2025 2024 Risk-free interest rate 3.99 % - 4.29 % 4.80 % - 5.27 % Expected term of options (in years) 0.50 0.50 Expected stock price volatility 70.91 % - 208.00 % 50.95 % - 63.92 % Expected dividends — % — % 100 Stock-Based Compensation Expense The following table presents the classification of stock-based compensation expense during the years ended December 31, 2025, and 2024 (in thousands): Year Ended December 31, 2025 2024 Stock options and ESPP $ 18,065 $ 24,764 Restricted stock units 8,171 11,585 Performance-based restricted stock units — 1,277 Total stock-based compensation expense $ 26,236 $ 37,626 Research and development expenses $ 9,983 $ 14,108 General and administrative expenses $ 16,253 $ 23,518 12. Income Taxes The Company had a pre-tax U.S. book loss of $ 149.3 million and $ 210.3 million for the years ended December 31, 2025 and 2024, respectively. During the twelve months ended December 31, 2025 and 2024, the Company did not record an income tax provision. The Company continues to maintain a 100 % valuation allowance on total deferred tax assets as the Company believes it is more likely than not that the related deferred tax assets will not be realized. The following table is a reconciliation of the U.S. federal statutory rate of 21.0% to our effective tax rate for the year ended December 31, 2025, in accordance with the guidance in ASU 2023-09 (in thousands, except percentages): Year Ended December 31, 2025 Amount Percentage US Federal Statutory Tax Rate $ ( 31,362 ) 21.0 % State taxes, net of federal tax benefit * ( 205 ) 0.2 % Tax Credit: R&D Credits ( 5,889 ) 3.9 % Change in Valuation Allowance 30,182 ( 20.2 ) % Nondeductible Items: Stock Based Compensation 3,998 ( 2.7 ) % Section 162(m) 1,659 ( 1.1 ) % Permanent Items 35 — % Worldwide changes in unrecognized tax benefits 1,582 ( 1.1 ) % Effective income tax rate $ — — % * California comprised the majority of tax effect in this category The following table is a reconciliation of the U.S. federal statutory tax rate of 21.0% to our effective tax rate for the year ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09: 101 Year Ended December 31, 2024 Income tax computed at federal statutory rate 21.0 % State taxes, net of federal tax benefit ( 0.6 ) % General business credit—federal 3.3 % Stock-based compensation ( 1.6 ) % Other permanent differences ( 0.2 ) % Section 162(m) ( 0.7 ) % Change in valuation allowance ( 21.2 ) % Effective income tax rate — % Net deferred tax assets and liabilities consisted of the following (in thousands): December 31, 2025 2024 Deferred tax assets: Net operating losses $ 130,017 $ 94,882 Research and development credits 43,032 37,740 Accrued expenses 1,168 1,862 Other 779 757 Capitalized research and development 46,789 55,291 Lease liability 6,118 6,300 Stock based compensation 6,983 7,722 Total deferred tax assets 234,886 204,554 Deferred tax liabilities: Prepaid expenses ( 300 ) ( 331 ) Right of use asset ( 5,038 ) ( 5,725 ) Total deferred tax liabilities ( 5,338 ) ( 6,056 ) Valuation allowance 229,548 198,498 Net deferred taxes $ — $ — Net operating losses and tax credit carryforwards were as follows (in thousands): December 31, 2025 Expiration Year Net operating losses, federal (starting from January 1, 2018) $ 456,433 Does not expire Net operating losses, federal (before January 1, 2018) $ 29,486 2035-2037 Net operating losses, state $ 398,202 2035-2045 Tax credits, federal $ 46,406 2036-2045 Tax credits, state $ 10,323 Does not expire Utilization of the net operating loss carryforwards and research credit carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code (“IRC”) and similar state provisions. Annual limitations may result in the expiration of the net operating losses and tax credit carryforwards before they are utilized. The Company performed a IRC Section 382 analysis through December 31, 2025 and does not expect any previous ownership changes to result in a limitation that will reduce the total amount of net operating loss and tax credit carryforwards disclosed that can be utilized. Subsequent ownership changes may affect the limitation in future years. 102 During the years ended December 31, 2025 and 2024, the Company recorded a full valuation allowance on federal and state deferred balances since management does not forecast the Company to be in a profitable position in the near future. Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2025 and 2024 related primarily to the increases in net operating loss carryforwards and research and development tax credit carryforwards and were as follows (in thousands): Year Ended December 31, 2025 2024 Valuation allowance at the beginning of the year $ 198,498 $ 153,941 Increases recorded to income tax provision 31,050 44,557 Valuation allowance at the end of the year $ 229,548 $ 198,498 The Company’s U.S. federal and state income tax returns are generally subject to tax examinations for the tax years ended December 31, 2018 through December 31, 2025. There are currently no pending income tax examinations. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state tax authorities to the extent utilized in a future period. The entire amount of the unrecognized tax benefits would not impact the Company’s effective tax rate if recognized. The Company's accounting policy is to include interest and penalties as a component of tax expense. During the years ended December 31, 2025 and 2024, the Company did not recognize accrued interest and penalties related to unrecognized tax benefits. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease during the next 12 months. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): Year Ended December 31, 2025 2024 January 1 $ 10,239 $ 7,974 Additions based on tax positions related to current year 1,819 2,505 (Reductions) additions for tax positions of prior year ( 168 ) ( 240 ) December 31 $ 11,890 $ 10,239 The Company did not make cash payment for income taxes in the years ended December 31, 2025 and 2024. 13. Segment The Company operates and manages its business as one reportable and operating segment, which is the business of developing and commercializing novel therapies for patients. The CODM reviews financial information on an aggregate basis for allocating and evaluating financial performance. The Company defines its segments based on the way in which internally reported financial information is regularly reviewed by the CODM to analyze financial performance, make decisions, and allocate resources. The CODM assesses performance for the segment and decides how to allocate resources based on net loss which is also reported on the Statement of Operations and Comprehensive Loss as consolidated net loss. All long-lived assets are maintained in the United States of America. Our CODM is regularly provided with more detailed expense information than what is included in our Statement of Operations and Comprehensive Loss. The table below shows a reconciliation of the Company’s net loss, including the significant expense categories regularly provided to and reviewed by the CODM, as computed under U.S. GAAP to the Company’s total net loss in the statements of operations (in thousands) 103 Year Ended 2025 2024 Revenue $ — $ — Operating expenses: Bexotegrast - clinical trial and outside service third party contracting costs 42,410 86,365 Employee-related expenses - research and development (excluding stock-based compensation) 31,551 35,489 General and administrative costs (excluding stock-based compensation) 30,963 35,537 Other segment items 51,449 70,974 Segment loss 156,373 228,365 Reconciliation of segment loss Interest and other (income) expense, net ( 11,416 ) ( 21,085 ) Interest expense 2,559 3,024 Loss on extinguishment of debt 1,828 — Net loss $ 149,344 $ 210,304 Other segment items include total stock-based compensation and research and development costs related to other pipeline programs and other non-program costs (excluding employee-related expenses). 14. Commitments and Contingencies Purchase Commitments The Company has contractual arrangements with research and development organizations and suppliers; however, these contracts are generally cancellable on 30 days’ notice and the obligations under these contracts are largely based on services performed. Legal Proceedings From time to time, the Company may become involved in legal proceedings arising from the ordinary course of business. The Company records a liability for such matters when it is probable that future losses will be incurred and that such losses can be reasonably estimated. Significant judgment by us is required to determine both probability and the estimated amount. Management is currently not aware of any legal matters that could have a material adverse effect on our financial position, results of operations or cash flows. Indemnification In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ insurance. 15. Leases On September 28, 2023, the Company entered into a lease agreement for premises consisting of approximately 100,904 square feet of office and laboratory space located at Oyster Point Blvd, South San Francisco, California (the "Oyster Point Lease"), which is being used as a single unified Company headquarters. The lease term of approximately seven years started in the second quarter of 2024 when the Landlord substantially completed tenant improvements, and may be extended for a period of eight years at then prevailing market rates for a comparable property. Total future lease payments are approximately $ 38.3 million which represent payments due for the initial term of the lease. We excluded extension options that are not reasonably certain to be exercised from our lease terms. Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease term. Additionally, the Company 104 provided a letter of credit to the Landlord in the amount of $ 1.4 million in connection with the Oyster Point Lease, which is classified as restricted cash as of December 31, 2025. Though the Oyster Point Lease is accounted for as a single contract, the office space was occupied in March 2024 while the laboratory space was occupied in June 2024. Accordingly, the Company measured and allocated consideration to each lease component. Upon commencement of each lease component the Company recognized an aggregate right-of-use asset ("ROU") and lease liability of $ 23.7 million and $ 6.1 million during the quarters ended March 31, 2024 and June 30, 2024, respectively. Operating lease ROU assets and liabilities on our balance sheets represent the present value of our remaining lease payments over the remaining lease terms. We use our incremental borrowing rate to calculate the present value of our lease payments, as the implicit rates in our leases are not readily determinable. Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the date of the commencement of the new lease. The undiscounted future non-cancellable lease payments of the Company's operating lease liability as of December 31, 2025 were as follows (in thousands): Year ending December 31: Operating Leases 2026 $ 4,075 2027 5,898 2028 7,467 2029 8,128 Thereafter 12,692 Total undiscounted lease payments 38,260 Less: Present value discount ( 9,155 ) Total discounted lease payments 29,105 Total current operating lease liabilities 1,447 Total non-current operating lease liabilities 27,658 Total lease liability $ 29,105 The weighted-average remaining lease terms and discount rates related to the Company's operating leases were as follows: As of December 31, 2025 2024 Weighted-average remaining lease term (in years) 5.0 6.4 Weighted-average discount rate 9.3 % 9.3 % Variable lease costs comprise primarily of the Company's proportionate share of operating expenses, property taxes, and insurance. Short-term lease expense and variable lease payments recorded in operating expenses were immaterial for the years ended December 31, 2025 and 2024. Lease expenses are as follows (in thousands) As of December 31, 2025 2024 Operating lease costs $ 6,022 $ 5,756 Other variable costs 1,945 1,428 Total expense $ 7,967 $ 7,184 16. Defined Contribution Plan The Company sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code covering substantially all full-time U.S. employees. Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal tax regulations. The Company made contributions to the plan of $ 1.3 million, and $ 1.0 million during the years ended December 31, 2025, and 2024, respectively. 105 17. Restructuring of Operations On May 1, 2025, we announced a reduction in workforce that impacted approximately 45 % of our then-current employees. This restructuring plan amounted to $ 3.8 million inclusive of severance, retention bonus and COBRA payment, and was completed and settled in cash as of December 31, 2025. $ 2.8 million was recorded to research and development expenses and $ 1.0 million was recorded to general and administrative expenses for the year ended December 31, 2025. In December 2025, we initiated an additional restructuring plan totaling $ 2.5 million. The restructuring plan was completed on December 15, 2025 and the entire cost, consisting of severance and a benefits continuation payment was accrued within Accrued Compensation and Benefits as of December 31, 2025. $ 2.2 million was recorded to research and development expenses and $ 0.3 million was recorded to general and administrative expenses for the year ended December 31, 2025. 18. Net Loss Per Share Attributable to Common Stockholders The following common share equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been antidilutive: Year Ended December 31, 2025 2024 Options to purchase common stock 7,456,066 8,300,804 Restricted stock units 858,247 932,634 Total 8,314,313 9,233,438 19. Subsequent Event On March 3, 2026, the Company entered into an Amendment to Stockholder Rights Agreement to extend the expiration time of the Rights for one year from March 11, 2026 to March 11, 2027, unless the Rights are earlier redeemed, exchanged, or terminated in accordance with the terms and conditions of the Rights Agreement. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.