Praxis Precision Medicines, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the "SEC") on February 28, 2025. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2024 and in the "Risk Factors" section of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Overview We are a clinical-stage biopharmaceutical company translating insights from genetic epilepsies into the development of therapies for central nervous system, or CNS, disorders characterized by neuronal excitation-inhibition imbalance. Normal brain function requires a delicate balance of excitation and inhibition in neuronal circuits, which, when dysregulated, can lead to abnormal function and both rare and more prevalent neurological disorders. We are applying genetic insights to the discovery and development of therapies for neurological disorders through two proprietary platforms, using our understanding of shared biological targets and circuits in the brain. Each platform currently has multiple programs, with significant potential for additional program and indication expansion: • Cerebrum ™, our small molecule platform, utilizes deep understanding of neuronal excitability and neuronal networks and applies a series of computational and experimental tools to develop orally available precision therapies • Solidus ™, our antisense oligonucleotide, or ASO, platform, is an efficient, targeted precision medicine discovery and development engine anchored on a proprietary, computational methodology Our platforms utilize a deliberate, pragmatic and patient-guided approach, leveraging a suite of translational tools, including novel transgenic and predictive translational animal models and electrophysiology markers, to enable an efficient path to proof-of-concept in patients. Through this approach, we have established a diversified, multimodal CNS portfolio with four clinical-stage product candidates across epilepsy and movement disorders. For our vormatrigine program (formerly known as PRAX-628) within the Cerebrum™ platform, we announced positive results from our Photo-Paroxysmal Response, or PPR, study in the first quarter of 2024, and initiated the ENERGY program to generate patient eligibility, efficacy, safety and pharmacokinetics (PK) data. The ENERGY program includes five studies: EMPOWER, RADIANT, POWER1, POWER2 and POWER3. We initiated the EMPOWER study, an observational study of vormatrigine in patients with epilepsy, in the third quarter of 2024. In August 2025, we announced positive topline results from our first efficacy study, RADIANT, an open label study in patients with focal onset seizures or generalized epilepsy. We are currently enrolling the POWER1 study, a double-blind, placebo-controlled, 12-week study in focal onset seizures, and expect to finalize the study in the fourth quarter of 2025. POWER2, our third efficacy study, is planned to begin in the third quarter of 2025, with enrollment expected to be completed in the second half of 2026. We intend to initiate POWER3, a clinical trial which will assess vormatrigine as a single-agent treatment for focal onset seizures, in the first half of 2026. For our relutrigine program (formerly known as PRAX-562), we announced positive topline results from the first cohort of our EMBOLD study in the third quarter of 2024, and disclosed updated data from the study's open-label extension through 11 months in May 2025. We are enrolling the second cohort of the EMBOLD study, with topline results expected no later than the first half of 2026. In July 2025, the U.S. Food and Drug Administration granted breakthrough therapy designation for relutrigine for the treatment of seizures associated with SCN2A and SCN8A developmental and epileptic encephalopathies, or DEEs. We have also initiated the EMERALD study in a broader DEE patient population, and expect to complete enrollment in 2026. For our ulixacaltamide program, we shared the results of a pre-planned statistic interim analysis of Study 1 of our Phase 3 Essential 3 clinical program for essential tremor in February 2025. We are making certain adjustments to the analysis of the Essential3 program based upon review of blinded data, and expect to conduct and disclose 18 the results of such analysis by early-fall 2025. The decision about whether the data supports the submission of an NDA will be made after analyzing the final results for Study 1 and Study 2. For our most advanced product candidate under the Solidus™ platform, elsunersen (formerly known as PRAX-222), we shared results from Part 1 of the EMBRAVE study in the fourth quarter of 2023. We are currently enrolling the second cohort of the EMBRAVE study in Brazil, with topline results expected in the first half of 2026, and have initiated EMBRAVE3, a Phase 3 registrational study for SCN2A gain-of-function DEE. We also have three earlier stage novel ASOs with preclinical proof of mechanism. PRAX-080 is focused on PCDH19 mosaic expression, PRAX-090 is targeting SYNGAP1 loss-of-function, or LoF, mutations which is a leading cause of severe intellectual disability and epilepsy in DEEs, and PRAX-100 is targeting SCN2A LoF mutations, the predominant generic link to de novo autism spectrum disorders, or ASD. We anticipate nominating a development candidate for PRAX-100 by mid- 2025, and development candidates for PRAX-080 and PRAX-090 by the end of 2025. We were incorporated in 2015 and commenced operations in 2016. Since inception, we have devoted substantially all of our resources to developing our preclinical and clinical product candidates, building our intellectual property, or IP, portfolio, business planning, raising capital and providing general and administrative support for these operations. We employ a “virtual” research and development model, relying heavily upon external consultants, collaborators, contract development and manufacturing organizations and contract research organizations, or CROs, to conduct our preclinical and clinical activities. Since inception, we have financed our operations primarily with proceeds from the sale and issuance of equity securities. We are a development stage company and we have not generated any revenue from product sales, and do not expect to do so for several years, if at all. All of our product candidates are still in preclinical and clinical development. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved. We have incurred recurring operating losses since inception, including a net loss of $140.4 million for the six months ended June 30, 2025. As of June 30, 2025, we had an accumulated deficit of $977.2 million. We expect to incur significant expenses and operating losses for the foreseeable future as we expand our research and development activities. In addition, our losses from operations may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities. We anticipate that our expenses will be maintained or increased in connection with our ongoing activities, as we: • advance vormatrigine (formerly PRAX-628) in the ENERGY program; • advance relutrigine (formally PRAX-562) in the EMBOLD and EMERALD clinical trials; • advance elsunersen (formerly PRAX-222) in the EMBRAVE and EMBRAVE3 clinical trials; • advance ulixacaltamide through the Phase 3 Essential3 clinical trial program for ET; • advance our preclinical candidates to clinical trials; • further invest in our pipeline; • further invest in our manufacturing capabilities; • seek regulatory approval for our product candidates; • maintain, expand, protect and defend our IP portfolio; • acquire or in-license technology; • establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; and • when needed, increase our headcount to support our development efforts and any future commercialization efforts. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to 19 finance our operations through the sale of equity, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations. As of June 30, 2025, we had cash, cash equivalents and marketable securities of $446.6 million. We expect that our cash, cash equivalents, and marketable securities as of June 30, 2025 will be sufficient to fund our operating expenditures and capital expenditure requirements necessary to advance our research efforts and clinical trials into 2028. The analysis included consideration of our current financial needs and ongoing research and development plans. We have based this estimate on assumptions that may provide to be wrong, and we could exhaust our available capital resources sooner than we expect. See “—Liquidity and Capital Resources.” Financial Operations Overview Revenue We have not generated any revenue from the sale of products since inception and do not expect to generate any revenue from the sale of products for several years, if at all. As discussed in Note 7 to our condensed consolidated financial statements, we entered into an Option and License Agreement, or the Collaboration Agreement, with UCB Biopharma SRL, or UCB, in December 2022. During the three and six months ended June 30, 2024, we recognized $0.4 million and $0.8 million of collaboration revenue, respectively. In December 2024, UCB exercised its option to in-license global development and commercialization rights under the terms of the Collaboration Agreement. Accordingly, we did not recognize any collaboration revenue from the Collaboration Agreement during the three and six months ended June 30, 2025. We have no further research service obligations under the terms of the Collaboration Agreement. Operating Expenses Research and Development Expenses The nature of our business and primary focus of our activities generate a significant amount of research and development costs. Research and development expenses represent costs incurred by us for the following: • costs to develop our portfolio; • discovery efforts leading to development candidates; • clinical development costs for our product candidates; and • costs to develop our manufacturing technology and infrastructure. The costs above comprise the following categories: • personnel-related expenses, including salaries, benefits and stock-based compensation expense; • expenses incurred under agreements with third parties, such as consultants, investigative sites and CROs, that conduct our preclinical and clinical studies and in-licensing arrangements; • costs incurred to maintain compliance with regulatory requirements; • costs incurred with third-party contract development and manufacturing organizations to acquire, develop and manufacture materials for preclinical and clinical studies; and • depreciation, amortization and other direct and allocated expenses, including rent and other operating costs, such as information technology, incurred as a result of our research and development activities. 20 We expense research and development costs as incurred. We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors and our clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated balance sheets as prepaid expenses or accrued expenses. Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized, even when there is no alternative future use for the research and development. The capitalized amounts are expensed as the related goods are delivered or the services are performed. As a company operating in a virtual environment, a significant portion of our research and development costs have been external costs incurred by third-parties. We track direct external research and development expenses to specific platforms and product candidates upon commencement. Due to the number of ongoing studies and our ability to use resources across platforms, indirect or shared operating costs incurred for our research and development platforms, such as personnel, facility costs and certain consulting costs, are not recorded or maintained on a platform-specific basis. The following table reflects our research and development expenses, including direct expenses summarized by platform and indirect or shared operating costs recognized as research and development expenses during each period presented (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Cerebrum™ $ 46,977 $ 14,967 $ 89,809 $ 27,752 Solidus™ 1,979 1,680 3,327 2,870 Personnel-related (including stock-based compensation) 11,459 8,450 24,310 19,402 Other indirect research and development expenses 2,591 2,163 6,366 4,220 Total research and development expenses $ 63,006 $ 27,260 $ 123,812 $ 54,244 Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will be maintained or increase in the foreseeable future as we advance our product candidates through the development phase, and as we continue to discover and develop additional product candidates and expand into additional therapeutic areas. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales or licensing of our product candidates. This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of: • our ability to add and retain key research and development personnel; • the timing and progress of preclinical and clinical development activities; • the number and scope of preclinical and clinical programs we decide to pursue; • our ability to successfully complete clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; • our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our product candidates; • our successful enrollment in and completion of clinical trials; • the costs associated with the development of any additional product candidates we identify in-house or acquire through collaborations; 21 • our ability to discover, develop and utilize biomarkers to demonstrate target engagement, pathway engagement and the impact on disease progression of our product candidates; • our ability to establish and maintain agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidates are approved; • the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder; • our ability to obtain and maintain patent, trade secret and other IP protection and regulatory exclusivity for our product candidates, if approved; • our receipt of marketing approvals from applicable regulatory authorities; • our ability to commercialize products, if approved, whether alone or in collaboration with others; and • the continued acceptable safety profiles of our product candidates. A change in any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time to complete our clinical development activities. We may never obtain regulatory approval for any of our product candidates. Drug commercialization will take several years and require significant development costs. General and Administrative Expense General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for personnel in our executive, finance, legal, commercial and administrative functions. General and administrative expenses also include legal fees relating to corporate matters; professional fees for accounting, auditing, tax and administrative consulting services; commercial-related costs to support market assessments and scenario planning; insurance costs; administrative travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for office rent and other operating costs, such as information technology. Costs to secure and defend our IP are expensed as incurred and are classified as general and administrative expenses. These costs relate to the operation of the business and are unrelated to the research and development function or any individual platform or product candidate. We anticipate that our general and administrative expenses may increase in the future as we increase our headcount, when needed, to support the expected growth in our research and development activities and the potential commercialization of our product candidates. We also expect to incur additional IP-related expenses as we file patent applications to protect innovations arising from our research and development activities. Other Income Other Income, Net Other income, net consists of interest income from our cash, cash equivalents and marketable securities and amortization of investment premiums and discounts. Income Taxes Since our inception, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in each year or for our earned research and development tax credits due to our uncertainty of realizing a benefit from those items. Income taxes are determined at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits and other permanent differences. Our income tax provision may be significantly affected by changes to our estimates. There was no income tax provision recognized for the three and six months ended June 30, 2025 and 2024. Results of Operations Comparison of the Three Months Ended June 30, 2025 and 2024 22 The following table summarizes our condensed consolidated statements of operations for each period presented (in thousands): Three Months Ended June 30, Change 2025 2024 Collaboration revenue $ — $ 357 $ (357) Operating expenses: Research and development 63,006 27,260 35,746 General and administrative 13,061 10,585 2,476 Total operating expenses 76,067 37,845 38,222 Loss from operations (76,067) (37,488) (38,579) Other income: Other income, net 4,940 4,811 129 Total other income 4,940 4,811 129 Net loss $ (71,127) $ (32,677) $ (38,450) Collaboration Revenue The $0.4 million decrease in collaboration revenue is associated with a decrease in the revenue recorded under the Collaboration Agreement with UCB that was executed in December 2022. In December 2024, UCB exercised its option to in-license global development and commercialization rights for a development candidate as part of the Collaboration Agreement. As such, we have no further research service obligations under the terms of the Collaboration Agreement and did not record any associated revenue during the three months ended June 30, 2025. Research and Development Expense The following table summarizes our research and development expenses for each period presented, along with the changes in those items (in thousands): Three Months Ended June 30, Change 2025 2024 Cerebrum™ $ 46,977 $ 14,967 $ 32,010 Solidus™ 1,979 1,680 299 Personnel-related (including stock-based compensation) 11,459 8,450 3,009 Other indirect research and development expenses 2,591 2,163 428 Total research and development expenses $ 63,006 $ 27,260 $ 35,746 The $35.7 million increase in research and development expenses was primarily attributable to the following: • $32.0 million increase in expense related to our Cerebrum™ platform, driven primarily by: ◦ a $15.9 million increase in spend for our vormatrigine program, primarily driven by spend related to Radiant and POWER1, as well as phase 1 study spend; ◦ a $9.1 million increase in spend for our relutrigine program, primarily related to spend for our EMBOLD study, startup expense for our EMERALD study, phase 1 study spend and current quarter manufacturing spend; ◦ a $6.4 million increase in spend for our ulixacaltamide program, primarily due to Essential3 study spend; and ◦ a $0.6 million increase in activities for our earlier stage assets as we advance our portfolio. • $3.0 million increase in personnel-related costs due to increased headcount; • $0.4 million increase in indirect expenses, none of which were individually significant; and 23 • $0.3 million increase in expense related to our Solidus™ platform, primarily elsunersen program spend. General and Administrative Expense The $2.5 million increase in general and administrative expenses was primarily attributable to the following: • $1.3 million increase in indirect expenses, primarily software to support operations and increased sponsorships and advocacy activities; • $0.8 million increase in personnel-related costs due to increased headcount; and • $0.4 million increase in professional expenses primarily related to audit fees. Other Income Other income for the three months ended June 30, 2025 and 2024 was comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization. Results of Operations Comparison of the Six Months Ended June 30, 2025 and 2024 The following table summarizes our condensed consolidated statements of operations for each period presented (in thousands): Six Months Ended June 30, Change 2025 2024 Collaboration revenue $ — $ 788 $ (788) Operating expenses: Research and development 123,812 54,244 69,568 General and administrative 26,983 25,918 1,065 Total operating expenses 150,795 80,162 70,633 Loss from operations (150,795) (79,374) (71,421) Other income: Other income, net 10,372 7,144 3,228 Total other income 10,372 7,144 3,228 Net loss $ (140,423) $ (72,230) $ (68,193) Collaboration Revenue The $0.8 million decrease in collaboration revenue is associated with a decrease in the revenue recorded under the Collaboration Agreement with UCB that was executed in December 2022. In December 2024, UCB exercised its option to in-license global development and commercialization rights for a development candidate as part of the Collaboration Agreement. As such, we have no further research service obligations under the terms of the Collaboration Agreement and did not record any associated revenue during the six months ended June 30, 2025. Research and Development Expense The following table summarizes our research and development expenses for each period presented, along with the changes in those items (in thousands): 24 Six Months Ended June 30, Change 2025 2024 Cerebrum™ $ 89,809 $ 27,752 $ 62,057 Solidus™ 3,327 2,870 457 Personnel-related (including stock-based compensation) 24,310 19,402 4,908 Other indirect research and development expenses 6,366 4,220 2,146 Total research and development expenses $ 123,812 $ 54,244 $ 69,568 The $69.6 million increase in research and development expenses was primarily attributable to the following: • $62.1 million increase in expense related to our Cerebrum™ platform, driven primarily by: ◦ a $29.0 million increase in spend for our vormatrigine program, driven primarily by spend related to Radiant and POWER1, as well as phase 1 study spend; ◦ a $18.7 million increase in spend for our ulixacaltamide program, primarily due to increased Essential3 activity compared to prior year; ◦ a $13.5 million increase in spend for our relutrigine program, primarily spend for our EMBOLD study, startup expense for our EMERALD study, manufacturing spend and phase 1 study spend; and ◦ a $0.9 million increase in activities for our earlier stage assets. • $4.9 million increase in personnel-related costs due to increased headcount; • $2.1 million increase in indirect expenses driven primarily by software and consulting spend to support operations; and • $0.5 million increase in expense related to our Solidus™ platform, primarily elsunersen program spend for our EMBRAVE study and EMBRAVE3 startup costs. General and Administrative Expense The $1.1 million increase in general and administrative expenses was primarily attributable to the following: • $1.6 million increase in professional expenses primarily related to consulting, legal and audit expenses; • $1.5 million increase in indirect expenses, primarily software to support operations and increased sponsorships and advocacy activities; and • $2.0 million decrease in personnel-related costs mainly due to decreased stock-based compensation expense. Other Income Other income for the six months ended June 30, 2025 and 2024 was comprised of interest income on our cash, cash equivalents, and marketable securities and investment premium and discount amortization. Liquidity and Capital Resources Sources of Liquidity Since our inception, we have incurred significant losses in each period. We have not yet commercialized any of our product candidates, which are in various phases of preclinical and clinical development, and we do not expect to generate revenue from sales of any products for several years, if at all. To date, we have financed our operations primarily with proceeds from the issuance of redeemable convertible preferred stock and from the sale of common stock through an initial public offering, common stock and pre-funded warrants through follow-on public offerings and common stock from at-the-market offerings under our shelf 25 registration statement. From inception through June 30, 2025, we have raised $1.2 billion in aggregate cash proceeds from such transactions, net of issuance costs. As of June 30, 2025, we had cash, cash equivalents and marketable securities of $446.6 million. In December 2023, we entered into an Open Market Sale Agreement, or the 2023 Sales Agreement, with Jefferies, to provide for the offering, issuance and sale of up to an aggregate amount of $75.0 million of common stock from time to time in at-the-market offerings. The 2023 Sales Agreement was terminated in January 2024. During the six months ended June 30, 2024, we issued and sold an aggregate of 192,190 shares under the 2023 Sales Agreement for aggregate net proceeds of $5.3 million, after deducting commissions and offering expenses payable by us. In January 2024, we completed a public offering of: (i) an aggregate of 3,802,025 shares of our common stock at a public offering price of $35.50 per share, including the underwriters' full exercise of their option to purchase 633,750 additional shares of common stock, and (ii) pre-funded warrants to purchase 1,056,725 shares of common stock at a public offering price of $35.4999 per share of common stock underlying the warrants. The purchase price per share of each pre-funded warrant represents the per share offering price for the common stock, less the $0.0001 per share exercise price of each underlying share. Total net proceeds generated from the offering were approximately $161.6 million, after deducting underwriting discounts, commissions and other offering expenses payable by us. As of June 30, 2025, 352,500 warrants associated with this offering were exercised on a cashless basis with no cash proceeds received by us. In March 2024, we entered into an Open Market Sale Agreement, or the 2024 Sales Agreement, with Jefferies, to provide for the offering, issuance, and sale of up to an aggregate amount of $150.0 million of common stock in at-the-market offerings. During the six months ended June 30, 2024, we issued and sold an aggregate of 17,662 shares under the 2024 Sales Agreement for aggregate net proceeds of $0.9 million, after deducting commissions and offering expenses payable by us. In April 2024, we completed a public offering of: (i) an aggregate of 3,849,558 shares of our common stock at a public offering price of $56.50 per share, including the underwriters' full exercise of their option to purchase 530,973 additional shares of common stock, and (ii) pre-funded warrants to purchase 221,238 shares of common stock at a public offering price of $56.4999 per share of common stock underlying the warrants. The purchase price per share for each pre-funded warrant represents the per share offering price for the common stock, less the $0.0001 per share exercise price of each underlying share. Total net proceeds generated from the offering were approximately $216.0 million, after deducting underwriting discounts, commissions and other offering expenses payable by us. In December 2024, we entered into an amendment to the 2024 Sales Agreement with Jefferies to provide for the offering, issuance and sale of up to an aggregate of $250.0 million of common stock from time to time in at-the-market offerings. During the six months ended June 30, 2025, we issued and sold an aggregate of 1,351,689 shares under the amended 2024 Sales Agreement for aggregate net proceeds of $83.3 million, after deducting commissions and offering expenses payable by us. Cash Flows The following table provides information regarding our cash flows for each period presented (in thousands): Six Months Ended June 30, 2025 2024 Net cash (used in) provided by: Operating activities $ (107,686) $ (48,135) Investing activities (33,170) (287,142) Financing activities 82,899 399,120 Net (decrease) increase in cash, cash equivalents and restricted cash $ (57,957) $ 63,843 Operating Activities Our cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support our business. We have historically experienced negative cash flows from 26 operating activities as we have invested in developing our portfolio, drug discovery efforts and related infrastructure. The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges and changes in operating assets and liabilities, which are primarily the result of increased expenses and timing of vendor payments. During the six months ended June 30, 2025, net cash used in operating activities of $107.7 million was primarily due to our $140.4 million net loss, partially offset by $17.8 million in changes in operating assets and liabilities primarily related to an increase in accounts payable and $14.9 million of non-cash charges primarily related to stock-based compensation. During the six months ended June 30, 2024, net cash used in operating activities of $48.1 million was primarily due to our $72.2 million net loss, partially offset by $2.2 million in changes in operating assets and liabilities primarily related to increases in accounts payable and accrued expenses, and $21.9 million of non-cash charges primarily related to stock-based compensation. Investing Activities During the six months ended June 30, 2025, net cash used in investing activities of $33.2 million was primarily related to purchases of marketable securities offset by maturities of marketable securities. During the six months ended June 30, 2024, net cash used in investing activities of $287.1 million was primarily related to maturities of marketable securities. Financing Activities During the six months ended June 30, 2025, net cash provided by financing activities of $82.9 million consisted primarily of net proceeds from our at-the-market offerings. During the six months ended June 30, 2024, net cash provided by financing activities of $399.1 million consisted primarily of net proceeds from our January 2024 and April 2024 follow-on public offerings, our at-the-market offerings and our collaboration and license agreement with Tenacia Biotechnology (Shanghai) Co., Ltd. Plan of Operation and Future Funding Requirements We expect our expenses to increase substantially in connection with our ongoing research and development activities, particularly as we advance the preclinical activities and clinical trials of our product candidates. As a result, we expect to incur substantial operating losses and negative operating cash flows for the foreseeable future. We anticipate that our expenses will increase substantially if and as we: • advance the clinical development of our clinical-stage product candidates within our Cerebrum™ and Solidus™ platforms; • advance the development of any additional product candidates; • conduct research and continue preclinical development of potential product candidates; • make strategic investments in manufacturing capabilities; • maintain our IP portfolio and opportunistically acquire complementary IP; • seek to obtain regulatory approvals for our product candidates; • potentially establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any products for which we may obtain regulatory approval; • when needed, add clinical, scientific, operational, financial and management information systems and personnel, including personnel to support our product development and potential future commercialization efforts and to support our operations as a public company; and • experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges. 27 We are unable to estimate the exact amount of our working capital requirements, but based on our current operating plan, we believe that our cash, cash equivalents, and marketable securities as of June 30, 2025 will be sufficient to fund our operating expenses and capital expenditure requirements into 2028. However, we have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with product development and potential collaborations with third parties for the development of our product candidates, we may incorrectly estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including, but not limited to: • the scope, progress, results and costs of preclinical studies and clinical trials for our platforms and product candidates; • the number and characteristics of product candidates and technologies that we develop or may in-license; • the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; • the costs necessary to obtain regulatory approvals, if any, for products in the United States and other jurisdictions, and the costs of post-marketing studies that could be required by regulatory authorities in jurisdictions where approval is obtained; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our IP rights and defending any IP-related claims; • the continuation of our existing licensing arrangements and entry into new collaborations and licensing arrangements; • the costs we incur in maintaining business operations; • the costs associated with being a public company; • the revenue, if any, received from commercial sales of any product candidates for which we receive marketing approval; • the effect of competing technological and market developments; and • the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates, although we currently have no commitments or agreements to complete any such acquisitions or investments in businesses. Identifying potential product candidates and conducting preclinical testing and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives. Adequate additional funds may not be available to us on acceptable terms, or at all. We do not currently have any committed external source of funds. Market volatility could also adversely impact our ability to access capital as and when needed. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of our common stock. Additional debt financing and preferred 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 and may require the issuance of warrants, which could potentially result in dilution to the holders of our common stock. 28 If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates to third parties that we would otherwise prefer to develop and market ourselves. Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no changes to our critical accounting policies from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Judgments and Estimates” included in our Annual Report on Form 10-K filed with the SEC on February 28, 2025, other than as disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. Recently Issued Accounting Pronouncements We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, such standards will not have a material impact on our condensed consolidated financial statements or do not otherwise apply to our current operations.