Quince Therapeutics, Inc. 10-Q

10-Q Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2026 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number: 001-38890 Quince Therapeutics, Inc. (Exact name of registrant as specified in its charter) Delaware 90-1024039 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 611 Gateway Boulevard, Suite 273 South San Francisco, California 94080 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: ( 415 ) 910-5717 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.001 per share QNCX The Nasdaq Stock Market LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of August 7, 2026, the registrant had 1,017,063 shares of common stock, $0.001 par value per share, outstanding. EXPLANATORY NOTE On April 10, 2026, the Company effected a reverse stock split of all shares of its issued and outstanding common stock at a ratio of 1-for-10. On June 29, 2026, the Company effected a reverse stock split of all shares of its issued and outstanding common stock at a ratio of 1-for-20. The Company accounted for these reverse stock splits on a retrospective basis pursuant to Accounting Standards Codification (“ASC”) 260, Earnings Per Share. All issued and outstanding shares of common stock and share-based awards’ exercise prices and per share data in this report and the unaudited condensed consolidated financial statements have been adjusted, on a retrospective basis, to reflect the reverse stock splits for all periods presented. The number of authorized shares and par value of the common stock were not adjusted because of the reverse stock splits. Table of Contents Table of C ontents Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) 1 Condensed Consolidated Balance Sheets (Unaudited) 1 Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) 2 Condensed Consolidated Statements of Series C Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited) 3 Condensed Consolidated Statements of Cash Flows (Unaudited) 5 Notes to Unaudited Condensed Consolidated Financial Statements 6 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 3. Quantitative and Qualitative Disclosures About Market Risk 46 Item 4. Controls and Procedures 46 PART II. OTHER INFORMATION Item 1. Legal Proceedings 48 Item 1A. Risk Factors 48 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 109 Item 3. Defaults Upon Senior Securities 109 Item 4. Mine Safety Disclosures 109 Item 5. Other Information 109 Item 6. Exhibits 109 Signatures 112 1 Table of Contents Special Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, business strategy, drug candidates, planned preclinical studies and clinical trials, research and development costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "would," "expect," "objective," "plan," "potential," "seek," "grow," "target," "if," and similar expressions intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission (the "SEC"). It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur, and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: • our ability to successfully integrate the operations of the Company and Orphai (as defined below) and to realize the anticipated benefits of our acquisition of Orphai, including the advancement of the combined pipeline and the need to hire additional employees and our ability to attract and retain our personnel, including key personnel; • the ability of our preclinical studies and clinical trials to demonstrate acceptable safety and efficacy of our product candidates; • business disruptions affecting the initiation, patient enrollment, development and operation of our clinical trials; • the timing, progress and results of preclinical studies and clinical trials for our current and future product candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs; • the timing, scope and likelihood of regulatory filings and approvals, including Investigational New Drug ("IND") submissions for our product candidates; • our ability to develop and advance our current product candidates and programs into, and successfully complete, clinical trials; • our manufacturing, commercialization, and marketing capabilities and strategy; • the need to hire additional personnel and our ability to attract and retain such personnel; • the size of the market opportunity for our product candidates, including our estimates of the number of patients who suffer from the diseases we are targeting; • our expectations regarding the approval and use of our product candidates as first, second or subsequent lines of therapy or in combination with other drugs; • our financial performance; • the accuracy of our estimates regarding expenses, liquidity requirements, and needs for additional financing; • our expectations related to the use of our available cash; 2 Table of Contents • our ability to obtain funding for our operations; • our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately; • our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available; • potential claims relating to our intellectual property; and • our ability to maintain compliance with Nasdaq listing requirements. We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we do not intend to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations. You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. This Quarterly Report on Form 10-Q contains estimates, projections and other information concerning our industry, our business and the markets for our drug candidates. We obtained the industry, market and similar data set forth in this report from our own internal estimates and research and from academic and industry research, publications, surveys and studies conducted by third parties, including governmental agencies. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. While we believe that the data we use from third parties are reliable, we have not separately verified these data. Further, while we believe our internal research is reliable, such research has not been verified by any third party. You are cautioned not to give undue weight to any such information, projections and estimates. Unless the context requires otherwise, the terms (i) “we,” “us,” “our,” “Quince,” the “Company” and other similar terms refer to the business and operations of Quince Therapeutics, Inc. and its consolidated subsidiaries for periods prior to the Acquisition (as defined below) and to Orphai Holdings Therapeutics, Inc. and its consolidated subsidiaries, including Orphai Therapeutics, LLC, for periods after the Acquisition; (ii) “Orphai HoldCo” refers to Orphai Holdings Therapeutics, Inc., (iii) “Orphai Subsidiary” refers to Orphai Therapeutics, LLC, a wholly owned subsidiary of Orphai HoldCo, (iv) “Orphai” or “Orphai Therapeutics” refer collectively to Orphai HoldCo and Orphai Subsidiary and (v) “Orphai Acquisition” refers to the acquisition by the Company of Orphai Therapeutics pursuant to that certain Agreement and Plan of Merger, dated May 17, 2026 (the "Merger Agreement"), by and among the Company, Phoenix Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company, Phoenix Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, Orphai Subsidiary, and Orphai HoldCo. 3 Table of Contents PART I—FINANC IAL INFORMATION Item 1. Financ ial Statements. QUINCE THERAPEUTICS, INC. CONDENSED CONSOLIDAT ED BALANCE SHEETS (Unaudited) (In thousands, except share amounts) June 30, 2026 December 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 115,981 $ 5,809 Short-term investments — 11,943 Prepaid expenses and other current assets 7,430 5,144 Total current assets 123,411 22,896 Property and equipment, net 506 595 Operating lease right-of-use assets — 453 Intangible assets — 67,819 Other assets 78 1,760 Total assets $ 123,995 $ 93,523 LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 4,636 $ 2,223 Accrued expenses and other current liabilities 3,864 10,608 Current portion of debt — 18,026 Short-term contingent consideration — 12,369 Total current liabilities 8,500 43,226 Long-term operating lease liabilities — 330 Long-term contingent consideration — 51,961 Warrant liabilities 6,292 32,150 Other long-term liabilities 716 1,570 Total liabilities 15,508 129,237 Mezzanine equity: Series C Preferred Stock, $ 0.001 par value, 294,370 shares and no shares designated as of June 30, 2026 and December 31, 2025, respectively; 211,301.868 and no shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 143,811 — Stockholders’ equity (deficit): Preferred stock, $ 0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively — — Common stock, $ 0.001 par value, 250,000,000 shares authorized, 1,017,063 and 278,627 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively (1) 1 — Additional paid in capital (1) 460,447 418,987 Accumulated other comprehensive income 4,255 5,750 Accumulated deficit ( 500,027 ) ( 460,451 ) Total stockholders’ equity (deficit) ( 35,324 ) ( 35,714 ) Total liabilities, mezzanine equity, and stockholders’ equity (deficit) $ 123,995 $ 93,523 (1) Adjusted prior period common stock and additional paid-in-capital to reflect the 1-for-10 reverse stock split effected on April 10, 2026 and the 1-for-20 reverse stock split effected on June 29, 2026. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents QUINCE THERAPEUTICS, INC. CONDENSED CONSOLIDATED STAT EMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (In thousands, except share and per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Operating expenses: Research and development $ 5,461 $ 6,553 $ 12,306 $ 14,698 Acquired in-process research and development 59,000 — 59,000 — General and administrative 16,626 3,342 20,893 8,131 Gain on Orphai Acquisition ( 1,305 ) — ( 1,305 ) — Intangible asset impairment charge — — 67,808 — Fair value adjustment for contingent consideration — 532 ( 64,330 ) 2,456 Total operating expenses 79,782 10,427 94,372 25,285 Loss from operations ( 79,782 ) ( 10,427 ) ( 94,372 ) ( 25,285 ) Fair value adjustment for debt — ( 501 ) 12,168 ( 945 ) Fair value adjustment for warrants 4,507 ( 4,464 ) 35,623 ( 4,464 ) Warrant issuance costs ( 874 ) ( 872 ) ( 874 ) ( 872 ) Interest income 584 311 744 717 Other (expense) income, net 152 ( 29 ) 1,871 ( 116 ) Net loss before income tax expense ( 75,413 ) ( 15,982 ) ( 44,840 ) ( 30,965 ) Income tax benefit (expense) ( 75 ) ( 67 ) 5,264 ( 114 ) Net loss ( 75,488 ) ( 16,049 ) ( 39,576 ) ( 31,079 ) Other comprehensive loss: Foreign currency translation adjustments ( 355 ) 4,216 ( 1,490 ) 6,261 Unrealized loss on available-for-sale securities — ( 17 ) ( 5 ) ( 70 ) Total comprehensive loss $ ( 75,843 ) $ ( 11,850 ) $ ( 41,071 ) $ ( 24,888 ) Net loss per share – basic and diluted (1) $ ( 12.31 ) $ ( 68.75 ) $ ( 12.01 ) $ ( 137.17 ) Weighted average shares of common stock and in-substance common stock outstanding – basic and diluted (1) 6,132,845 233,431 3,295,727 226,571 (1) Adjusted prior period net loss per share and weighted average of common shares outstanding to reflect the 1-for-10 reverse stock split effected on April 10, 2026 and the 1-for-20 reverse stock split effected on June 29, 2026. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents QUINCE THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF SERIES C PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) (In thousands, except share and per share amounts) For the three months ended June 30, 2026 and 2025 Series C Preferred Stock Common Stock (1) Additional Paid in Accumulated Other Comprehensive Accumulated Total Stockholders' Shares Amount Shares Amount Capital (1) Income / (Loss) Deficit Equity (Deficit) Balance as of March 31, 2026 — $ — 689,541 $ 1 $ 435,600 $ 4,610 $ ( 424,539 ) $ 15,672 Issuance of common stock in connection with the ATM offerings, net — — 125,510 — 5,351 — — 5,351 Issuance of common stock in connection with the Orphai Acquisition — — 162,971 — 3,242 — — 3,242 Issuance of Series C Preferred Stock in connection with the Orphai Acquisition 67,101.235 48,146 — — — — — — Issuance of Series C Preferred Stock in connection with private placement offering, net of issuance costs 144,200.633 95,665 — — — — — — Fractional shares round up due to June 2026 Reverse Stock Split — — 39,041 — — — — — Fair value of replacement awards issued as consideration in Orphai Acquisition — — — — 4,161 — — 4,161 Stock based compensation — — — — 12,093 — — 12,093 Foreign currency translation adjustment — — — — — ( 355 ) — ( 355 ) Net loss — — — — — — ( 75,488 ) ( 75,488 ) Balance as of June 30, 2026 211,301.868 $ 143,811 1,017,063 $ 1 $ 460,447 $ 4,255 $ ( 500,027 ) $ ( 35,324 ) Balance as of March 31, 2025 — $ — 220,446 $ — $ 408,126 $ 1,957 $ ( 391,502 ) $ 18,581 Issuance of common stock and warrants in private placement offering, net — — 33,360 — 746 — — 746 Issuance of common stock in connection with the ATM offerings, net — — 13,833 — 2,890 — — 2,890 Issuance of common stock on exercise of stock options and vesting of restricted stock units — — 483 — 96 — — 96 Stock based compensation — — — — 1,273 — — 1,273 Foreign currency translation adjustment — — — — — 4,216 — 4,216 Unrealized loss on available for sale investments — — — — — ( 17 ) — ( 17 ) Net loss — — — — — — ( 16,049 ) ( 16,049 ) Balance as of June 30, 2025 — $ — 268,122 $ — $ 413,131 $ 6,156 $ ( 407,551 ) $ 11,736 (1) Adjusted prior period common stock and additional paid-in-capital to reflect the 1-for-10 reverse stock split effected on April 10, 2026 and the 1-for-20 reverse stock split effected on June 29, 2026. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents QUINCE THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF SERIES C PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) (In thousands, except share and per share amounts) For the six months ended June 30, 2026 and 2025 Series C Preferred Stock Common Stock (1) Additional Paid in Accumulated Other Comprehensive Accumulated Total Stockholders' Shares Amount Shares Amount Capital (1) Income / (Loss) Deficit Equity (Deficit) Balance as of December 31, 2025 — $ — 278,627 $ — $ 418,987 $ 5,750 $ ( 460,451 ) $ ( 35,714 ) Issuance of common stock in connection with the ATM offerings, net — — 526,435 1 20,337 — — 20,338 Issuance of common stock on exercise of pre-funded warrants, net — — 9,989 — 341 — — 341 Issuance of common stock in connection with the Orphai Acquisition — — 162,971 — 3,242 — — 3,242 Issuance of Series C Preferred Stock in connection with the Orphai Acquisition 67,101.235 48,146 — — — — — — Issuance of Series C Preferred Stock in connection with private placement offering, net of issuance costs 144,200.633 95,665 — — — — — — Fractional shares round up due to June 2026 Reverse Stock Split — — 39,041 — — — — — Fair value of replacement awards issued as consideration in Orphai Acquisition — — — — 4,161 4,161 Stock based compensation — — — — 13,379 — — 13,379 Foreign currency translation adjustment — — — — — ( 1,490 ) — ( 1,490 ) Unrealized loss on available for sale investments — — — — — ( 5 ) — ( 5 ) Net loss — — — — — — ( 39,576 ) ( 39,576 ) Balance as of June 30, 2026 211,301.868 $ 143,811 1,017,063 $ 1 $ 460,447 $ 4,255 $ ( 500,027 ) $ ( 35,324 ) Balance as of December 31, 2024 — $ — 220,009 $ — $ 406,653 $ ( 35 ) $ ( 376,472 ) $ 30,146 Issuance of common stock and warrants in private placement offering, net — — 33,360 — 746 — — 746 Issuance of common stock in connection with the ATM offerings, net — — 13,833 — 2,890 — — 2,890 Issuance of common stock on exercise of stock options and vesting of restricted stock units — — 920 — 183 — — 183 Stock based compensation — — — — 2,659 — — 2,659 Foreign currency translation adjustment — — — — — 6,261 — 6,261 Unrealized loss on available for sale investments — — — — — ( 70 ) — ( 70 ) Net loss — — — — — — ( 31,079 ) ( 31,079 ) Balance as of June 30, 2025 — $ — 268,122 $ — $ 413,131 $ 6,156 $ ( 407,551 ) $ 11,736 (1) Adjusted prior period common stock and additional paid-in-capital to reflect the 1-for-10 reverse stock split effected on April 10, 2026 and the 1-for-20 reverse stock split effected on June 29, 2026. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents QUINCE THERAPEUTICS, INC. CONDENSED CONSOLI DATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) For the Six Months Ended June 30, 2026 2025 Cash flows from operating activities Net loss $ ( 39,576 ) $ ( 31,079 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation 13,379 2,659 Depreciation and amortization 77 67 Change in the fair value of contingent consideration liabilities ( 64,330 ) 2,456 Change in fair value of debt, net ( 12,197 ) 828 Change in fair value of warrants ( 35,623 ) 4,464 Gain on settlement of accounts payable ( 3,720 ) — Intangible asset impairment charge 67,808 — Acquired in-process research and development from the Orphai Acquistion 59,000 — Gain on Orphai Acquisition ( 1,305 ) — Amortization of discount on available-for-sale investments ( 62 ) ( 590 ) Changes in operating assets and liabilities, net of acquisitions: Prepaid expenses and other current assets ( 3,277 ) 588 Right of use assets, operating leases and operating lease liabilities 451 53 Other assets 1,774 ( 121 ) Accounts payable 6,171 ( 1,417 ) Accrued expenses and other current liabilities ( 15,097 ) 1,103 Other liabilities 13 ( 27 ) Net cash used in operating activities ( 26,514 ) ( 21,016 ) Cash flow from investing activities: Purchase of investments — ( 13,789 ) Proceeds from maturities of investments 12,000 31,000 Purchase of property and equipment — ( 274 ) Net cash assumed in the Orphai Acquisition 8,001 — Net cash provided by investing activities 20,001 16,937 Cash flows from financing activities: Proceeds from issuance of common stock upon exercise of stock options — 183 Proceeds from issuance of common stock, common warrants, and pre-funded warrants pursuant to June 2025 private placement offering, net of issuance costs — 11,426 Proceeds from issuance of Series C Preferred Stock and Financing Warrants pursuant to May 2026 private placement offering, net of issuance costs 103,639 — Issuance of common stock in connection with the ATM offerings, net of issuance costs 20,338 2,890 Repayment of debt ( 5,545 ) — Cash settlement of common warrants ( 56 ) — Net cash provided by financing activities 118,376 14,499 Effect of exchange rate changes on cash ( 1,691 ) 194 Net increase in cash and cash equivalents 110,172 10,614 Cash and cash equivalents at beginning of period 5,809 6,212 Cash and cash equivalents at end of period $ 115,981 $ 16,826 Supplemental disclosures of cash flow and non-cash information: Cash paid for interest $ 29 $ 117 Offering costs in accounts payable and accrued expenses $ — $ 193 Noncash exercise of pre-funded warrants $ 341 $ — Common stock and Series C Preferred Stock issued in connection with Orphai Acquisition $ 51,388 $ — Fair value of replacement awards issued as consideration in the Orphai Acquisition $ 4,161 $ — Net liabilities assumed in connection with Orpahi Acquisition $ 9,283 $ — The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents QUINCE THERAPEUTICS, INC. NOTES TO CONDENSED CONS OLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Organization Description of Business Quince Therapeutics, Inc. ("Quince" or the "Company") is a clinical-stage biopharmaceutical company developing a novel disease modifying therapeutic to address the significant unmet medical need associated with pulmonary disorders with few, if any, treatment options available. Prior to the Orphai Acquisition (defined below), the Company was focused on developing its proprietary Autologous Intracellular Drug Encapsulation (“AIDE”) technology for the treatment of Ataxia-Telangiectasia (“A-T”) through its encapsulated dexamethasone sodium phosphate encapsulated in patient's own red blood cells (“eDSP”) product candidate. In January 2026, the Company completed its pivotal Phase 3 NEAT clinical trial of eDSP for the treatment of A-T. The primary endpoints of the NEAT trial did not reach statistical significance. Based on the results of the NEAT trial, the Company determined that it would no longer continue development of eDSP in this or other therapeutic indications, and is currently considering next steps for the eDSP program and other assets. Orphai Acquisition On May 18, 2026, the Company completed the Acquisition of Orphai (the "Orphai Acquisition"), in accordance with the terms of the Agreement and Plan of Merger, dated May 17, 2026 (the “Merger Agreement”). In connection with the Orphai Acquisition, the Company acquired Orphai’s lead asset, LAM-001, a proprietary investigational inhaled dry powder formulation of rapamycin whose differentiated characteristics may permit treatment of conditions associated with dysfunctional mammalian target of rapamycin (“mTOR”) activity that cannot be adequately treated using a systemically delivered formulation, including oral solution or tablets. Following the Orphai Acquisition, the Company’s lead product candidate is LAM-001. See Note 3 for further details. Liquidity and Capital Resources The Company has incurred losses and negative cash flows from operations since inception and expects to continue to generate operating losses for the foreseeable future. As of June 30, 2026, the Company had an accumulated deficit of $ 500.0 million . Since inception through June 30, 2026, the Company has funded operations primarily with the net proceeds from the sale of its securities, from the net proceeds from the Company’s initial public offering (the “IPO”) and from the net proceeds of private investments in public equity transactions (collectively known as “PIPE Financings”), including the concurrent private placement in May 2026 described below. As of June 30, 2026, the Company had cash and cash equivalents of $ 116.0 million . The Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued. Concurrent with the Orphai Acquisition, in May 2026, the Company completed a private placement financing of the Company’s Series C Non-Voting Convertible Preferred Stock (the “Series C Preferred Stock”) and warrants to purchase shares of Series C Preferred Stock, providing $ 115.0 million in gross upfront proceeds, with the potential to receive up to an additional $ 72.0 million in gross proceeds upon the exercise of the warrants (with an additional up to $ 11.0 million in gross proceeds available upon the exercise of warrants issued to former Orphai stockholders). The Series C Preferred Stock is subject to automatic conversion into common stock upon the third business day following the Company’s receipt of stockholder approval in accordance with Nasdaq Listing Rules, subject to certain beneficial ownership limitations. The Certificate of Designation of Preferences, Rights and Limitations of the Series C Non-Voting Convertible Preferred Stock (the “Certificate of Designation”) provides that, at any time following the earlier of (i) stockholder approval or (ii) six months after the initial issuance of the Series C Preferred Stock, if the Company fails to timely deliver shares of common stock to a converting holder in accordance with the terms of the Certificate of Designation, such holder may require 6 Table of Contents the Company to pay cash in an amount equal to the fair value of the undelivered shares. As a result, the Company concluded that the proceeds received from the private placement financing cannot be relied upon to mitigate conditions that raise substantial doubt because the availability of those proceeds is subject to conditions that are not entirely within the Company’s control. The conversion of the Series C Preferred Stock into common stock and therefore removal of the requirement to make cash payment based on the value of the undelivered shares is subject to a vote of the Company's stockholders. The Company’s ability to satisfy the potential cash settlement obligations associated with the Series C Preferred Stock is not entirely within its control, as it is contingent on, among other things, the Company’s ability to obtain stockholder approval and to deliver shares of common stock upon conversion within the timeframes required by the Certificate of Designation. If the Company is unable to obtain stockholder approval in a timely manner, or is otherwise unable to timely deliver shares of common stock upon conversion, holders who submit conversion notices after the applicable trigger date could require the Company to make significant cash payments that could substantially reduce the Company’s available cash resources. Factoring in these potential cash payments, based on its current operating plan, the Company believes that its cash and cash equivalents balance will not be sufficient to fund operations and capital expenditures for at least the twelve months following the issuance of these unaudited condensed consolidated financial statements. Accordingly, the Company concluded that substantial doubt about the Company’s ability to continue as a going concern continues to exist within one year after the date these financial statements are available to be issued. The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Note 2. Summary of Significant Accounting Policies Basis of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Quince Therapeutics, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. Basis of Presentation The accompanying unaudited condensed consolidated financial statements and the notes thereto have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions of the SEC on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair statement of the results of operations and cash flows for the periods presented have been included. The condensed consolidated balance sheet as of June 30, 2026, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2026 and 2025, the condensed consolidated statements of Series C Preferred Stock and stockholders’ equity (deficit) for the three and six months ended June 30, 2026 and 2025, the condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025, and the financial data and other financial information disclosed in the notes to the condensed consolidated financial statements are unaudited. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2025 included in the Company’s Form 10-K filed with the SEC on April 10, 2026. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any other future annual or interim period. Reverse Stock Splits On June 29, 2026, the Company effected a 1-for-20 reverse stock split of its outstanding common stock (the “June 2026 Reverse Stock Split”). The June 2026 Reverse Stock Split became effective as of 11:59 p.m., Eastern Time, on June 29, 2026 and the Company’s common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on June 30, 2026. The June 2026 7 Table of Contents Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock. On April 10, 2026, the Company effected a 1-for-10 reverse stock split of its outstanding common stock (the “April 2026 Reverse Stock Split”). The April 2026 Reverse Stock Split became effective as of 11:59 p.m., Eastern Time, on April 10, 2026 and the Company’s common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on April 13, 2026. The April 2026 Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock. All share and per share information has been retroactively adjusted to reflect the April and June 2026 Reverse Stock Splits (collectively, the "Reverse Stock Splits") for all periods presented in this report. Use of Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses, as well as related disclosure of contingent assets and liabilities. The most significant estimates used in the Company’s condensed consolidated financial statements relate to the determination of the fair value of identifiable assets and liabilities in connection with business combinations including associated intangible assets, the fair value of contingent consideration, warrant liabilities and debt, accruals for research and development costs, useful lives of long-lived assets, stock-based compensation and related assumptions, the incremental borrowing rate for leases and income tax uncertainties, including a valuation allowance for deferred tax assets, impairment of intangible assets; and contingencies. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from the Company’s estimates. Foreign Currency Translation and Transactions The functional currency of the Company’s wholly-owned international subsidiaries is the Euro. Prior to the dissolution of the Company's Australian subsidiary, the functional currency of that subsidiary was the Australian Dollar. The Company's financial results and financial position are translated into U.S. dollars using exchange rates at balance sheet dates for assets and liabilities and using average exchange rates for income and expenses. The resulting translation differences are presented as a separate component of accumulated other comprehensive loss, as a separate component of equity. Foreign currency transactions are translated into the functional currencies using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses, resulting from the settlement of such transactions and from the re-measurement of monetary assets and liabilities denominated in foreign currencies using exchange rates at balance sheet date and non-monetary assets and liabilities using historical exchange rates, are recognized in the condensed consolidated statements of operations and comprehensive loss. Segment Information The Company manages its business activities on a consolidated basis and operates as one operating and reportable segment, for the purposes of assessing performance and making operating decisions. Operating segments are defined as components of an enterprise for which discrete financial information is available and is evaluated regularly by the Chief Operating Decision Maker ("CODM"), in deciding how to allocate resources and assess performance. The Company’s Chief Executive Officer, who is the CODM, reviews financial information on a consolidated basis for purposes of allocating and evaluating financial performance. The CODM evaluates the Company’s performance and resource allocation by analyzing consolidated financial information. See Note 16 for further details. 8 Table of Contents Business Combination and Asset Acquisitions The Company evaluates whether an acquisition should be accounted for as a business combination or an asset acquisition under ASC 805, Business Combinations, based on whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. Transactions that do not meet the definition of a business are accounted for as asset acquisitions. The Company also evaluates whether the acquired entity is a variable interest entity ("VIE") under ASC 810, Consolidation. If the acquired entity is a VIE, the primary beneficiary is identified as the accounting acquire r. Replacement Awards When the Company assumes and replaces outstanding stock options of an acquired entity, the fair value of the replacement awards is measured as of the acquisition date using the Black-Scholes option-pricing model. The portion of the fair value attributable to pre-combination service is included in consideration, and the portion attributable to post-combination service is recognized as future compensation expense. Preferred Stock The Company assesses its preferred stock to determine whether it should be classified as a liability, mezzanine equity, or permanent equity. This assessment first considers whether the preferred stock meets the definition of a mandatorily redeemable financial instrument or is otherwise required to be classified as a liability under ASC 480, Distinguishing Liabilities from Equity. This includes an evaluation of any provisions labeled as a redemption feature, call option, or conversion option to determine whether the underlying redemption or settlement terms in substance require the Company to redeem the shares. For preferred stock that is not classified as a liability under ASC 480, the Company assesses whether the preferred stock should be classified as mezzanine equity or permanent equity. This assessment considers whether the preferred stock is redeemable (i) at a fixed or determinable price on a fixed or determinable date, (ii) at the option of the holder, or (iii) upon the occurrence of an event that is not solely within the Company's control. The Company also considers whether the preferred stock contains liquidation provisions, including fundamental transaction or deemed liquidation provisions, that carry the general characteristics of a redemption feature. Preferred stock that meets any of these conditions is classified as mezzanine equity and presented outside of permanent equity on the Company's condensed consolidated balance sheets. At all other times, the Company classifies its preferred stock in stockholders’ equity (deficit). If the preferred stock is classified as mezzanine equity, the Company further evaluates whether the preferred stock is currently redeemable or probable of becoming redeemable to determine whether the carrying value should be remeasured to its redemption value as of each balance sheet date. Intangible Assets Definite lived Intangible Assets Intangible assets with a definite useful life are amortized on a straight-line basis over the estimated useful life of the related assets. The Company regularly reviews whether current conditions or events suggest that the carrying values of its acquired definite lived intangible assets might not be recoverable. When such conditions are identified, an estimate of the undiscounted future cash flows from these assets, or relevant asset groupings, is compared to their carrying value to determine if an impairment exists. If an 9 Table of Contents impairment is identified, the loss is calculated as the difference between the carrying value of the intangible asset and its fair value, which is based on the net present value of the estimated future cash flows. Indefinite lived Intangible Assets Intangible assets with an indefinite useful life are not amortized. Intangible assets acquired in a business combination or an acquisition that are used in research and development activities (regardless of whether they have an alternative future use) shall be considered indefinite lived until the completion or abandonment of the associated research and development efforts. Intangible assets acquired in an asset acquisition with no alternative future use are allocated a portion of the consideration transferred and charged to expenses at the acquisition date. Intangible assets acquired in a business combination are initially recorded at fair value. During the period that those assets are considered indefinite lived, they shall not be amortized but shall be tested for impairment. Once the research and development efforts are completed or abandoned, the entity shall determine the useful life of the assets. An indefinite lived intangible asset shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount. If that is the case, the Company performs a quantitative impairment test, and, if the carrying amount of the Company exceeds its fair value, then the Company will recognize an impairment charge for the amount by which its carrying amount exceeds its fair value, not to exceed the carrying amount of the intangible asset. Qualitative factors to be considered include but are not limited to: • Cost factors such as increases in raw materials, labor, or other costs that have a negative effect on future expected earnings and cash flows • Legal/regulatory factors or progress and results of clinical trials • Other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset • Industry and market considerations such as a deterioration in the environment in which an entity operates, or a more competitive environment • Macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset. As a result of the clinical readout of the Phase 3 NEAT study in January 2026, which led the Company to discontinue development of its encapsulated dexamethasone sodium phosphate encapsulated in patient's own red blood cells (“eDSP") product candidate, the research and development associated with the in-process research and development ("IPR&D") was abandoned and an impairment charge recorded to reduce the carrying value to zero. Intangible assets acquired in an asset acquisition that are used in research and development activities (regardless of whether they have an alternative future use) shall be considered indefinite lived until the completion or abandonment of the associated research and development efforts. Contingent Consideration The Company determines the fair value of contingent consideration related to the Company's acquisition of EryDel in October 2023 using a probability-weighted discounted cash flow method, with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC Topic 820, Fair Value Measurement. The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future cash flows, during the contingent consideration period, appropriately discounted considering the uncertainties associated with the earnout obligation, and calculated in accordance with the terms of the definitive agreement. The liability for the contingent consideration were initially 10 Table of Contents established at the time of the acquisition and are evaluated on a quarterly basis based on additional information as it becomes available. Any change in the fair value adjustment is recorded in the earnings of that period. Changes in the fair value of the contingent consideration obligations may result from changes in probability assumptions with respect to the likelihood of achieving the various contingent payment obligations. Significant increases or decreases in the inputs noted above in isolation would result in a significantly lower or higher fair value measurement. As a result of the clinical readout of the Phase 3 NEAT study in January 2026, which led the Company to discontinue development of eDSP, the criteria for the contingent consideration payments will not be met, resulting in the related liability being reduced to zero. Cash, Cash Equivalents and Investments The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash equivalents include marketable securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase and at the end of each reporting period. Investments with maturities beyond three months at the date of purchase and which mature at, or less than twelve months from the balance sheet date are classified as short-term investments. Collectively, cash equivalents and short-term investments are considered available-for-sale and are recorded at fair value. Unrealized gains and losses are recorded as a component of other comprehensive loss in the consolidated statements of operations and included as a separate component of consolidated statements of stockholders’ equity. Realized gains and losses are included in interest income in the condensed consolidated statements of operations and comprehensive loss. Premiums (discounts) are amortized (accreted) over the life of the related investment as an adjustment to yield using the straight-line interest method. Dividend and interest income are recognized when earned. These amounts are recorded in “interest income” in the condensed consolidated statements of operations and comprehensive loss. Warrants The Company accounts for warrants as equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms. The assessment considers whether the warrants are freestanding financial instruments, meet the definition of a liability, and whether the warrants meet all of the requirements for equity classification, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For warrants that meet all criteria for equity classification, the warrants are recorded as a component of additional paid-in capital in the condensed consolidated balance sheets at the time of issuance. For warrants that do not meet all the criteria for equity classification, the warrants are recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized within the condensed consolidated statements of operations. The fair value of the warrants is estimated using the Black-Scholes option pricing model (see Note 11). Reserve for Italian Research and Development Tax Credit The Company maintains a reserve for Italian research and development tax credits to reflect estimated loss of utilization due to the wind-down of the business. This estimate is based on historical utilization and management’s judgment regarding forecasted utilization. Adjustments are recorded in research and development operating expense in the period they become known. 11 Table of Contents Recently Adopted Accounting Pronouncements There were no new accounting standards adopted during the three and six months ended June 30, 2026. Recent Accounting Pronouncements Not Yet Adopted The following are new accounting pronouncements that the Company is evaluating for future impacts on its financial statements: ASU 2024-03, Disaggregation of Income Statement Expenses (“DISE”) . In November 2024, the FASB issued a new accounting standard to improve the disclosures about an entity’s expenses and address requests from investors for more detailed information about the types of expenses included in commonly presented expense captions. The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with retrospective application permitted. The Company is evaluating the disclosure requirements related to the new standard. ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. In December 2025, the FASB issued a new accounting standard to clarify the applicability of interim reporting guidance under GAAP, provide a comprehensive list of interim disclosure requirements within Topic 270, and introduce a disclosure principle requiring entities to provide information about events and changes occurring after the end of the most recent annual reporting period that have a material impact on the entity. The ASU does not change the fundamental nature of interim reporting or expand or reduce existing interim disclosure requirements. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 for public business entities, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its interim financial reporting and related disclosures. All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable. Note 3. Asset Acquisition Acquisition of Orphai Therapeutics On May 18, 2026, the Company acquired Orphai pursuant to that certain Agreement and Plan of Merger, dated May 17, 2026 (the "Merger Agreement"). Under the terms of the Merger Agreement, following closing of the Orphai Acquisition, the Company issued to holders of Orphai, an aggregate of (i) 162,971 shares of the Company’s common stock and (ii) 67,101.235 shares of Series C Preferred Stock, each share of which is convertible into 52 shares of common stock, as adjusted for the June 2026 Reverse Stock Split, subject to certain conditions. Under the terms of the Merger Agreement, options to purchase Orphai common stock were assumed by the Company and were converted into options to purchase an aggregate of 1,308,804 shares of common stock, which options are subject to exercise restrictions prior to obtaining approval during a special meeting of stockholders. In addition, the Company issued to holders of Orphai warrants (the "Acquisition Warrants") to purchase an aggregate of 10,964.505 shares of Series C Preferred Stock (or 570,169 shares on an as-converted-to-common basis, and without giving effect to any beneficial ownership limitations), at an exercise price of $ 996.90 per share of Series C Preferred Stock (or $ 19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). On May 18, 2026, concurrent with the Orphai Acquisition, the Company entered into a securities purchase agreement (the "May 2026 Securities Purchase Agreement") for a private placement financing with new and returning investors to raise up to $ 187.0 million in gross proceeds, which includes $ 115.0 million in upfront proceeds and up to an additional approximately $ 72.0 million upon exercise of accompanying warrants, in which the investors were issued approximately 144,200.633 shares of Series C Preferred Stock (convertible into an aggregate of 7,498,447 shares of common stock, without giving effect to any beneficial ownership limitations) at a price of $ 797.50 per share, and accompanying warrants (the "Financing Warrants") to purchase up to 72,100.322 shares of Series C Preferred Stock (or 3,749,231 shares, on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations) at an exercise price of $ 996.90 per share (or $ 19.17 per share on an as-converted-to-common basis) 12 Table of Contents (the "May 2026 Financing"). For additional information relating to the May 2026 Financing, see Notes 4, 9, 10, and 11 to these unaudited condensed consolidated financial statements. The Orphai Acquisition was accounted for as an asset acquisition as Orphai did not meet the definition of a business under ASC Topic 805, Business Combinations (“ASC 805”) as substantially all of its value was in the IPR&D asset. Accordingly, the acquired net assets and assumed net liabilities of Orphai are recorded as of the Orphai Acquisition closing date at their fair value. The Company was determined to be the accounting acquirer based upon the terms of the Orphai Acquisition. Orphai was determined to be a variable interest entity (“VIE”) as it was insufficiently capitalized to fund future operations, where the Company is the primary beneficiary. As such, the acquisition costs of $ 2.1 million were expensed and not capitalized as part of the purchase price in accordance with ASC 805. In addition, the excess of the consideration transferred, and the fair value of the net asset acquired, IPR&D, and net liabilities assumed were recorded as an asset acquisition loss and included in the gain on Orphai Acquisition line item in the condensed consolidated statements of operations and comprehensive loss. The following table summarizes the estimated fair value of the consideration transferred of $ 56.9 million (in thousands): Common stock consideration (a) $ 3,242 Preferred stock consideration (b) 48,146 Warrant consideration (c) 1,315 Assumed share-based awards (d) 4,161 Fair value of total consideration transferred $ 56,864 (a) The fair value of consideration transferred was based on 162,971 shares of Common Stock issued multiplied by the closing price of Quince common stock on the acquisition date of May 18, 2026. (b) The fair value of 67,101.235 shares of Series C Preferred Stock was based on the fair value of the Series C Preferred Stock issued in the May 2026 Financing. For additional information, see Note 9 to these unaudited condensed consolidated financial statements. (c) The fair value of the warrants issued was determined utilizing the Black-Scholes-Merton option pricing model. Quince issued 10,964.505 warrants of Series C Preferred Stock. For additional information, see Note 11 to these unaudited condensed consolidated financial statements. (d) Each outstanding and unexercised option award to purchase shares of Orphai common stock was converted into an option award in respect of a number of shares of common stock of the Company. The calculation of consideration transferred includes the portion of the fair-value-based measure of the acquiree awards that relates to the pre-combination service period. The excess value of the replacement Quince awards as well as the fair-value-based measure of the acquiree award related to the post combination service period will be recorded as post combination compensation cost over the remaining service term. The following table summarizes the allocation of the estimated fair value of the consideration transferred to the net assets acquired and liabilities assumed, with the excess recorded to gain on acquisition (in thousands): Assets acquired: Cash and cash equivalents $ 8,001 Prepaid expenses and other current expenses 451 In-process research and development (e) 59,000 Total assets acquired 67,452 Liabilities assumed: Trade payables ( 3,097 ) Accrued expenses and other current liabilities ( 6,186 ) Total liabilities assumed ( 9,283 ) Fair value of assets acquired and liabilities assumed 58,169 Gain on Orphai Acquisition $ 1,305 (e) IPR&D represents the research and development projects of Orphai which were in-process, but not yet completed, and which the Company plans to advance. The fair value of IPR&D projects acquired in an asset acquisition with no alternative future use are allocated a portion of the consideration transferred and charged to expenses at the acquisition date. 13 Table of Contents Note 4. Fair Value Measurements The fair value of the Company's financial instruments reflects the amounts that the Company estimates that it would receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The Company discloses and recognizes the fair value of the assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows: Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 - Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly, including inputs in markets that are not considered to be active. Level 3 - Inputs that are unobservable. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the hierarchy during the six months ended June 30, 2026 and year ended December 31, 2025. The Company had elected the fair value option for the EIB Loan guaranteed by the Company in connection with the EryDel Acquisition. The Company had adjusted the EIB Loan to fair value through the change in fair value of debt in the accompanying condensed consolidated statements of operations and comprehensive loss. Subsequent unrealized gains and losses on items for which the fair value option is elected were reported in earnings. The Company will break out any change in value due to credit loss in accumulated other comprehensive loss. For the three and six months ended June 30, 2026 and year ended December 31, 2025, there was no change in value due to credit loss. Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of June 30, 2026 and December 31, 2025 are presented in the following tables (in thousands): Fair Value Measurements as of June 30, 2026 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 114,449 $ 114,449 $ — $ — Total Assets $ 114,449 $ 114,449 $ — $ — Liabilities: Acquisition Warrants 803 — — 803 Financing Warrants 5,480 — — 5,480 Common warrants 9 — — 9 Total $ 6,292 $ — $ — $ 6,292 14 Table of Contents Fair Value Measurements as of December 31, 2025 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 4,402 $ 4,402 $ — $ — Government and agency notes 11,943 — 11,943 — Total Assets $ 16,345 $ 4,402 $ 11,943 $ — Liabilities: Short-term contingent consideration $ 12,369 — — 12,369 Long-term contingent consideration 51,961 — — 51,961 Debt 18,026 — — 18,026 Common warrants 25,452 — — 25,452 Pre-Funded warrants 6,698 — — 6,698 Total Liabilities $ 114,506 $ — $ — $ 114,506 The Company classifies government and agency notes as Level 2 investments as the Company uses quoted prices for similar assets sourced from certain third-party pricing services. The third-party pricing services generally utilize industry standard valuation models for which all significant inputs are observable, either directly or indirectly, to estimate the price or fair value of the securities. The primary input generally includes reported trades or quotes on the same or similar securities. The Company does not make additional judgments or assumptions made to the pricing data sourced from the third-party pricing services. Level 3 Assets and Liabilities Contingent Consideration The following table reflects the changes in present value of acquisition related accrued earnouts of contingent consideration liability using significant unobservable inputs (Level 3) for the six months ended June 30, 2026 and 2025 (in thousands): June 30, 2026 June 30, 2025 Beginning balance $ 64,330 $ 56,691 Change in fair value ( 64,330 ) 2,456 Ending balance $ — $ 59,147 The contingent consideration arrangement required the Company to pay up to $ 485.0 million of additional consideration in cash, comprised of up to $ 5.0 million upon the enrollment of the first patient in the Phase 3 NEAT clinical trial, which was paid in 2024, $ 25.0 million at NDA acceptance, up to $ 60.0 million upon the achievement of specified approval milestones, and up to $ 395.0 million upon the achievement of specified on market and sales milestones. As a result of the clinical readout of the Phase 3 NEAT study in January 2026, which led the Company to discontinue development of eDSP, the criteria for the contingent consideration payments will not be met, resulting in the related liability being reduced to zero during the six months ended June 30, 2026. To estimate the fair value of the contingent consideration, the Company used a probability-weighted discounted cash flow model with an expected present value valuation technique with significant unobservable fair value inputs and is therefore classified as a Level 3 measurement. The estimates of fair value are uncertain and changes in the estimated inputs may result in significant adjustments to the fair value. The unobservable inputs consisted of the expected timing of milestone completion dates, probability of achievement, and discount rate. The change in the fair value of the contingent consideration during the six months ended June 30, 2025 is primarily due 15 Table of Contents to the expected timing of achieving various milestones, and the passage of time related to the contingent consideration earnout resulting from the EryDel Acquisition. The following table summarizes the assumptions used in the valuation of the contingent consideration in the period presented: December 31, 2025 Expected timing of milestones completion dates 2026 - 2038 Discount rate 14.2 % Probability of achievement 1 % - 56.5 % Debt The following table presents the changes in the fair value of the Level 3 EIB Loan for the six months ended June 30, 2026 and 2025 (in thousands): June 30, 2026 June 30, 2025 Beginning balance $ 18,026 $ 14,321 Change in fair value ( 12,168 ) 945 Interest payment ( 29 ) ( 117 ) Settlement of debt ( 5,545 ) — Due to foreign currency translation ( 284 ) 1,840 Ending balance $ — $ 16,989 To estimate the fair value of the EIB Loan, the Company used an expected present value valuation technique with significant unobservable inputs resulting in classification as a Level 3 measurement. The estimate of fair value is uncertain and changes in the estimated inputs may result in significant adjustments to the fair value. The unobservable inputs consisted of discount rate which includes the credit quality of the Company and credit spreads for comparable debt. The following table summarizes the assumptions including the unobservable inputs related to the Company's debt in the periods presented: December 31, 2025 Discount rate 13 % Acquisition and Financing Warrants In connection with the Orphai Acquisition, the Company issued to holders of Orphai warrants the Acquisition Warrants to purchase 10,964.505 shares of Series C Preferred Stock (or 570,169 shares on an as-converted-to-common basis, and without giving effect to any beneficial ownership limitations), at an exercise price of $ 996.90 per share of Series C Preferred Stock (or $ 19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). Concurrent with the May 2026 Securities Purchase Agreement, the Company issued the Financing W arrants to purchase up to 72,100.322 shares of Series C Preferred Stock (or 3,749,231 shares, on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations) at an exercise price of $ 996.90 per share (or $ 19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). Each Financing Warrant will be exercisable beginning on the trading day following the earlier of the Company’s public announcement of (a) top line data from the ongoing LAM-001 Phase 2 trial in Bronchiolitis Obliterans Syndrome (the “LAM-001 Trial”) and (b) the termination or suspension of the LAM-001 Trial and through the 30 th day following such public announcement and will be exercisable at a price equal to $ 996.90 per share of Series C Preferred Stock (or $ 19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split) for up to an 16 Table of Contents additional approximately $ 72.0 million in additional proceeds if exercised in full (with an additional up to $ 11.0 million in gross proceeds available upon the exercise of warrants issued to former Orphai stockholders). The Acquisition and Financing Warrants will become exercisable for common stock following the Company’s receipt of stockholder approval for the conversion of the Series C Preferred Stock issued in the Orphai Acquisition in accordance with Nasdaq Listing Rules, among other related acquisition matters, subject to certain beneficial ownership limitations. The Acquisition and Financing Warrants are classified as liabilities on the Company's condensed consolidated balance sheet based on an assessment of the warrants' specific terms and applicable authoritative guidance in ASC 480. See Note 11 for further details. The warrant liability is initially measured at fair value upon issuance and is subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in the condensed consolidated statements of operations. The Company estimates the fair value of warrants utilizing the Black-Scholes option pricing model, which is dependent upon several Level 3 inputs that are not observable in active markets, including the expected term, volatility, risk-free interest rate, and expected dividends. Each of these inputs is subjective and generally requires significant judgment to determine. The following table summarizes key inputs used in the valuation of the liability classified Acquisition and Financing Warrants as of the periods presented: As of Orphai Acquisition issuance date As of Private Placement issuance date As of June 30, 2026 Expected term 0.75 years 0.75 years 0.75 years Warrant exercise price $ 19.17 $ 19.17 $ 19.17 Risk-free interest rate 3.70 % 3.70 % 3.70 % Expected volatility 80.00 % 80.00 % 80.00 % The following table presents the changes in the fair value of the Level 3 liability classified Acquisition and Financing Warrants for the six months ended June 30, 2026: Acquisition Warrants Financing Warrants Balance as of December 31, 2025 $ — $ — Issuance of warrants 1,315 8,847 Change in fair value of warrants ( 512 ) ( 3,367 ) Balance as of June 30, 2026 $ 803 $ 5,480 June 2025 Warrants During the year ended December 31, 2025, in connection with the June 2025 Private Placement (as defined below), the Company issued common and pre-funded warrants (the "June 2025 Warrants") which are classified as liabilities based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 815. See Note 11 for further details. The Company estimated the fair value of the common and pre-funded warrants utilizing the Black-Scholes option pricing model, which was dependent upon several Level 3 inputs that are not observable in active markets, such as expected term, volatility, risk-free interest rate, and expected dividends. Each of these inputs is subjective and generally requires judgment to determine. In January 2026, all 10,000 shares of the pre-funded warrants were exercised through a cashless exercise into 9,989 shares of the Company's common stock. In May 2026, the common warrants were terminated as a result of the Orphai Acquisition. The following table summarizes key inputs used in the valuation of the liability classified June 2025 Warrants as of the period presented: 17 Table of Contents As of December 31, 2025 Expected term 4.45 years Common stock market price $ 670.00 Common warrants exercise price $ 240.00 Pre-Funded warrants exercise price $ 0.20 Risk-free interest rate 3.63 % Expected volatility 110.96 % The following table presents the changes in the fair value of the Level 3 liability classified June 2025 Warrants for the six months ended June 30, 2026: (in thousands) Balance as of December 31, 2025 $ 32,150 Exercise of pre-funded warrants and reclassification to equity ( 340 ) Payout of common warrants ( 57 ) Change in fair value of warrants ( 31,744 ) Balance as of June 30, 2026 $ 9 Note 5. Cash, Cash Equivalents and Investments The following tables categorize the fair values of cash, cash equivalents and investments measured at fair value on a recurring basis on the condensed consolidated balance sheets (in thousands): June 30, 2026 December 31, 2025 Cash and cash equivalents: Cash $ 1,532 $ 1,407 Money market funds 114,449 4,402 Total cash and cash equivalents $ 115,981 $ 5,809 Short-term investments: Government and agency notes — 11,943 Total short-term investments $ — $ 11,943 The Company's investments are classified as available-for-sale securities. As of June 30, 2026 , there were no available-for-sale securities outstanding. There were no significant realized gains or losses recognized on the sale or maturity of available-for-sale securities for the three and six months ended June 30, 2026 and 2025 , and as a result, the Company did no t reclassify any significant amounts out of accumulated other comprehensive loss. No other-than-temporary impairments on these securities were recognized for the three and six months ended June 30, 2026 and 2025. The Company periodically assesses its investment in available-for-sale securities for impairment losses and credit losses. The amount of credit losses is determined by comparing the difference between the present value of future cash flows expected to be collected on these securities and the amortized cost. Factors considered in assessing credit losses include the position in the capital structure, vintage and amount of collateral, delinquency rates, current credit support, and geographic concentration. There have been no impairments or credit losses related to available-for-sale securities for the three and six months ended June 30, 2026 and 2025. For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value and recognized in interest and other income, net in the statement of operations and comprehensive loss. If neither criteria is met, the Company evaluates whether the decline in fair value is related to credit-related factors or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions 18 Table of Contents specifically related to the security, among other factors. Credit-related impairment losses, limited by the amount that the fair value is less than the amortized cost basis, are recorded through an allowance for credit losses in other income (expense), net. Any unrealized losses from declines in fair value below the amortized cost basis as a result of non-credit factors are recognized in accumulated other comprehensive income, net of tax as a separate component of stockholders’ equity, along with unrealized gains. Realized gains and losses and declines in fair value, if any, on available-for-sale securities are included in other income (expense), net in the condensed consolidated statement of operations and comprehensive loss. For purposes of identifying and measuring credit-related impairments, the Company’s policy is to exclude applicable accrued interest from both the fair value and amortized cost basis of the related security. The Company has elected to write-off uncollectible accrued interest receivable balances in a timely manner, which is defined by the Company as when interest due becomes 90 days delinquent. The accrued interest write-off will be recorded by reversing interest income. Accrued interest receivable is recorded in other current assets on the condensed consolidated balance sheets. The following table summarizes the available-for-sale securities (in thousands): Fair Value Measurements as of June 30, 2026 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Money market funds $ 114,449 $ 114,449 Total cash equivalents and investments $ 114,449 — $ — $ 114,449 Classified as: Cash equivalents (original maturities within 90 days) $ 114,449 Total cash equivalents and investments $ 114,449 Fair Value Measurements as of December 31, 2025 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Money market funds $ 4,402 $ — $ — $ 4,402 Government and agency notes 11,938 5 — 11,943 Total cash equivalents and investments $ 16,340 $ 5 $ — $ 16,345 Classified as: Cash equivalents (original maturities within 90 days) $ 4,402 Short-term investments (maturities within one year) 11,943 Total cash equivalents and investments $ 16,345 19 Table of Contents Note 6. Balance Sheet Components Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands): June 30, 2026 December 31, 2025 Prepaid research and development expenses $ 1,269 $ 578 Short-term Italian research and development tax credit, net 229 — Short-term VAT receivable, net 4,773 3,622 Prepaid insurance 272 635 Prepaid expenses 494 255 Other current assets 393 54 Total prepaid expenses and other current assets $ 7,430 $ 5,144 The Company was eligible to obtain an R&D tax credit as companies in Italy that invest in eligible research and development activities, regardless of the legal form and economic sector in which they operate, can benefit from an R&D tax credit. Such tax credits can only be used to offset payments of certain taxes and contributions (e.g., social contributions, VAT payables, registration fees, income and withholding taxes and other tax-related items that companies usually pay mont hly). During the three and six months ended June 30, 2026, the Company recorded no increases to R&D tax credit and $ 3.0 million increase to R&D tax credit balance due to the release of Italy-related unrecognized tax benefits. During the three and six months ended June 30, 2026, the Company utilized $ 1.5 million and $ 2.1 million of R&D tax credit towards related tax payable and payroll-related tax expenses. The Company recorded an adjustment to reduce the reserve for estimated credits that were not probable of being used of $ 0.4 million for a total of $ 0.7 million reserved based on forecasted utilization in Italy as of June 30, 2026. During the three and six months ended June 30, 2026, t he Company recorded a $ 0.5 million reserve for estimated VAT receivable that are not probable of being recovered. The Company recognized a total reduction to R&D expense of $ 0.1 million and $ 1.2 million for the three and six months ended June 30, 2026, and reductions to R&D expense of $ 0.6 million and $ 0.9 million for the three and six months ended June 30, 2025. The balance in the reserve for Italian research and development tax credit and reserve for VAT receivable for the six months ended June 30, 2026 is as follows (in thousands): Reserve for Italian research and development tax credit Reserve for VAT receivable Beginning balance as of December 31, 2025 $ — $ — Change in reserve ( 649 ) ( 515 ) Ending balance as of June 30, 2026 $ ( 649 ) $ ( 515 ) Other Assets Other assets consisted of the following (in thousands): June 30, 2026 December 31, 2025 Long-term VAT receivable $ — $ 1,682 Equity investments in Lighthouse Pharmaceuticals, Inc. 78 78 Total other assets $ 78 $ 1,760 20 Table of Contents Property and Equipment, Net Property and equipment, net consist of the following (in thousands): June 30, 2026 December 31, 2025 Computer equipment $ 61 $ 66 Computer software 38 32 Lab equipment 1,031 1,076 Leasehold improvement 37 38 Office furniture 221 227 Less: accumulated amortization and depreciation ( 882 ) ( 844 ) Property and equipment, net $ 506 $ 595 Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): June 30, 2026 December 31, 2025 Personnel expenses $ 1,762 $ 3,138 Research and development expenses 722 6,966 Professional fees 1,016 181 Current portion of operating lease liabilities — 115 Other 364 208 Total accrued expenses and other current liabilities $ 3,864 $ 10,608 During the six months ended June 30, 2026, the Company entered into settlement agreements with vendors pursuant to which they relinquished amounts owed by the Company. This resulted in a $ 3.7 million gain on settlement of accounts payable for the six months ended June 30, 2026 , which is reflected in the condensed consolidated statements of operations and comprehensive loss within research and development. For the six months ended June 30, 2026 and 2025, the severance accrual activity was as follows (in thousands): For the Six Months Ended June 30, 2026 2025 Beginning accrued severance $ 42 $ — Incurred during the period 2,251 413 Severance paid during the period ( 2,293 ) ( 168 ) Ending accrued severance $ — $ 245 During the six months ended June 30, 2026 and 2025, the Company incurred severance costs related to personnel separation, reflecting payments made and accrued to departing employees. Other Long-Term Liabilities Other long-term liabilities consist of the following (in thousands): June 30, 2026 December 31, 2025 Federal and state taxes payable $ 540 $ 773 Foreign taxes payable 103 691 Other long-term liabilities 73 106 Other long-term liabilities $ 716 $ 1,570 21 Table of Contents Note 7. Leases In January 2024, the Medolla Lease Agreement for the office space was renegotiated. The new Medolla Lease Agreement includes an additional space and commenced on February 1, 2024, to end on January 31, 2030, substituting the Medolla Lease Agreement commenced in June 2018. In June 2026, the Medolla Lease was terminated, and the Company recognized an immaterial loss in connection with the termination. The Company recognizes lease expense on a straight-line basis over the term of its operating lease. During the three and six months ended June 30, 2026, the Company recorded lease expense of $ 43 thousand and $ 80 thousand , respectively. During the three and six months ended June 30, 2025, the Company recorded lease expense of $ 38 thousand and $ 76 thousand , respectively. Supplemental balance sheet information related to leases as follows (in thousands except lease terms and discount rates): December 31, 2025 Assets: Operating lease right of use asset, net $ 453 Liabilities: Short-term operating lease liability 115 Long-term operating lease liability 330 Total lease liabilities $ 445 Other information: Weighted average remaining lease term 3.7 years Weighted average discount rate 9.12 % There are no future minimum lease payments under lease agreements as of June 30, 2026 . Note 8. Debt In connection with the acquisition of EryDel on October 20, 2023 , the Company became a guarantor in respect of the EIB Loan. The EIB Loan was amended and restated as of the acquisition date. The EIB Loan provided for maximum borrowings of 30.0 million euro through four tranches; tranche A, 3.0 million euro; tranche B, 7.0 million euro; tranche C, 10.0 million euro; and tranche D, 10.0 million euro. Each tranche was subject to conditions precedent related to the Company’s business and capitalizatio n. Only tranches A and B were drawn. All amounts due under tranche A and B were payable on their maturity date of August 2026. Interest accrued at fixed rates for each tranche and was payable on the maturity date for each Tranche (with the exception of 2 % cash interest which was accrued and payable quarterly during fiscal year 2025 pursuant to the terms of the Amendment, which correspondingly reduced the deferred interest rate accruing during such period). The fixed rates ranged from 7.0 % to 9.0 % per annum. The Company had elected to account for the EIB Loan at fair value, which required the EIB Loan to be recorded at fair value at issuance and at the end of each reporting period. Gains or losses upon remeasurement were recorded in other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The Company presented separately in other comprehensive loss the portion of the total change in the fair value of the EIB Loan that results from a change in instrument-specific credit risk. The EIB Loan’s fair value at the date it was assumed adjusted its carrying value based on using a discounted cash flow analysis with a discount rate based on a yield curve that was adjusted for credit rating. In March 2026, the EIB agreed to a full settlement of all obligations associated with the loan with a single payment of 4.8 million euros ($ 5.5 million) which was paid on March 30, 2026. 22 Table of Contents For the six months ended June 30, 2026 , the Company paid 25 thousand euros ( $ 29 thousand ) in interest payments. Note 9. Series C Preferred Stock Series C Preferred Stock O n May 18, 2026, the Company filed the Certificate of Designation with the Secretary of State of the State of Delaware in connection with the Orphai Acquisition. The Certificate of Designation provides for the authorization of 294,370 shares of Series C Preferred Stock, of which 67,101.235 shares were issued as merger consideration in connection with the Orphai Acquisition, and 144,200.633 shares were issued in the concurrent May 2026 Financing. Holders of Series C Preferred Stock are entitled to receive dividends on shares of Series C Preferred Stock (on an as-converted basis) equal to and in the same form as dividends paid on shares of the Company's common stock. Except as otherwise provided in the Certificate of Designation or as otherwise required by the Delaware General Corporation Law of the State of Delaware, the Series C Preferred Stock has no voting rights and no rights to elect directors. Upon any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, each holder of Series C Preferred Stock is entitled to receive out of the assets of the Company the same amount that a holder of common stock would receive if the Series C Preferred Stock were converted to common stock, paid pari passu with the holders of common stock. If the assets of the Company are insufficient to pay the holders of Series C Preferred Stock in full, all remaining assets of the Company are distributed ratably to the holders of Series C Preferred Stock and the holders of common stock in accordance with their respective amounts. The Series C Preferred Stock is not redeemable. However, if, at any time after the earlier of (i) stockholder approval of the Company Stockholder Matters or (ii) six months after the initial issuance of the Series C Preferred Stock, the Company fails to deliver conversion shares to a holder as required, the Company is required, at the request of the holder, to pay cash equal to the fair value of such undelivered shares. Effective upon Stockholder Approval, each share of Series C Preferred Stock will automatically convert into 52.00 shares of Common Stock, as adjusted for the June 2026 Reverse Stock Split . Prior to that, each share of Series C Preferred Stock is convertible into 52.00 shares of Common Stock at the option of the holder, as adjusted for the June 2026 Reverse Stock Split, at any time following the earlier of (i) Stockholder Approval or (ii) six months after the initial issuance of the Series C Preferred Stock. Given the cash settlement feature described above and the fundamental transaction provisions of the Series C Preferred Stock, the Series C Preferred Stock was classified as mezzanine equity on the condensed consolidated balance sheets. Note 10. Stockholders’ Equity Common Stock On June 4, 2025, the Company’s shareholders approved an amendment to the Company’s certificate of incorporation to increase the total number of authorized shares of Common Stock from 100,000,000 to 250,000,000 . The Reverse Stock Splits did not affect the number of authorized shares of common stock or the par value of the common stock. 23 Table of Contents ATM Program On December 18, 2024, the Company entered into a Controlled Equity Offering SM Sales Agreement, with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC (the "Agents"), relating to the sale of shares of the Company's common stock. In accordance with the terms of this agreement, the Company may offer and sell up to $ 75.0 million shares of common stock. During the six months ended June 30, 2026, the Company utilized its ATM program to raise net proceeds of approximately $ 20.3 million by issuing 526,435 shares of common stock. As of June 30, 2026, $ 47.5 million remained available to be utilized under the ATM program. May 2026 Private Placement On May 18, 2026, concurrent with the Orphai Acquisition, the Company entered into the May 2026 Securities Purchase Agreement for a private placement financing with new and returning investors to raise up to $ 187.0 million in gross proceeds, which includes $ 115.0 million in gross upfront proceeds, net of $ 11.4 million of offering costs, commissions, legal and other expenses for net proceeds from the offering of $ 103.6 million , and up to an additional approximately $ 72.0 million upon exercise of the Financing Warrants, in which the investors were issued approximately 144,200.633 shares of Series C Preferred Stock (convertible into an aggregate of 7,498,447 shares of common stock, without giving effect to any beneficial ownership limitations) at a price of $ 797.50 per share and Financing Warrants to purchase up to 72,100.322 shares of Series C Preferred Stock (or 3,749,231 shares, on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations) at an exercise price of $ 996.90 per share (or $ 19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). For additional information, see Note 3, 9, and 11 to these unaudited condensed consolidated financial statements. June 2025 Private Placement On June 12, 2025, the Company entered into a Securities Purchase Agreement (the “June 2025 Securities Purchase Agreement”), with certain institutional investors (the “Investors”) and certain members of the Company’s management (together with the Investors, the “June 2025 Purchasers”) pursuant to which the Company issued and sold to the June 2025 Purchasers in a private placement (“June 2025 Private Placement”): (i) 33,360 shares (the “Shares”) of its common stock, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 10,000 shares of common stock, and (iii) accompanying warrants to purchase up to an aggregate of 43,360 shares of common stock (the “Common Warrants”), for aggregate gross proceeds of approximately $ 11.5 million (excluding up to approximately $ 10.4 million of aggregate gross proceeds that may be received in the future upon the cash exercise in full of the Common Warrants issued in the June 2025 Private Placement), before deducting placement agent fees and other expenses payable by the Company. In May 2026, all of the Common Warrants issued in connection with the June 2025 Private Placement were terminated in connection with the consummation of the Orphai Acquisition. Note 11. Warrants Acquisition and Financing Warrants On May 18, 2026, under the Merger Agreement, the Company issued Acquisition Warrants to holders of Orphai warrants to purchase up to an aggregate of 10,964.505 shares of Series C Preferred Stock (or 570,169 shares on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations), at an exercise price of $ 996.90 per share of Series C Preferred Stock (or $ 19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). In addition, on May 18, 2026, concurrent with the Orphai Acquisition, in connection with the May 2026 Financing, the Company issued Financing Warrants to investors in the May 2026 Financing to purchase up to an aggregate of 72,100.322 shares of Series C Preferred Stock (or 3,749,231 shares on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations), at an exercise price of $ 996.90 per share of Series C Preferred Stock (or $ 19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). 24 Table of Contents In the aggregate, the Company issued warrants to purchase up to 83,064.827 shares of Series C Preferred Stock (or 4,319,400 shares on an as-converted-to-common basis). The Acquisition and Financing Warrants do not become exercisable until the trading day following the earlier of the Company's public announcement of (a) top line data from the LAM-001 Trial or (b) the termination or suspension of the LAM-001 Trial, and remain exercisable only through the 30th day following such announcement. Prior to the Company's receipt of stockholder approval for the conversion of the Series C Preferred Stock issued in the Orphai Acquisition in accordance with Nasdaq Listing Rules, the Acquisition and Financing Warrants are exercisable only into shares of Series C Preferred Stock, which is itself subject to certain beneficial ownership limitations established by each holder. As a result of these provisions, the warrants fail the indexation guidance under ASC 815 and are classified as liabilities. The Acquisition and Financing Warrant liability was recorded at fair value as of the issuance date and is subject to remeasurement to estimated fair value at each balance sheet date until the warrants are exercised or expire, with changes in fair value recognized in the condensed consolidated statements of operations. The proceeds from the May 2026 Financing were first allocated to the full fair value of the Financing Warrants due to the liability classification. The fair value of the Financing Warrants at issuance was $ 11.5 million. The remaining proceeds of $ 103.5 million, before issuance costs, were allocated to the Series C Preferred Stock. As of June 30, 2026, no ne of the Acquisition and Financing Warrants had been exercised, and 83,064.827 shares underlying the Acquisition and Financing Warrants remained outstanding. The following table is a summary of the Company's Acquisition and Financing Warrants outstanding as of June 30, 2026: Number of Common Stock Issuable Exercise Price Acquisition Warrants 570,169 $ 19.17 Financing Warrants 3,749,231 $ 19.17 Common and Pre-Funded Warrants On June 12, 2025, in connection with the sale and issuance of common stock as part of the June 2025 Private Placement, the Company issued Pre-Funded Warrants to purchase up to an aggregate of 10,000 shares of common stock at an exercise price of $ 0.20 per share and Common Warrants to purchase up to an aggregate of 43,360 shares of common stock at an exercise price of $ 240.00 per share. Each Share and each Pre-Funded Warrant sold pursuant to the June 2025 Securities Purchase Agreement was accompanied by one Common Warrant. The combined purchase price of each Share and accompanying Common Warrant was $ 265.00 (which included $ 25.00 per Common Warrant in accordance with the rules and regulations of Nasdaq). The combined purchase price of each Pre-Funded Warrant and accompanying Common Warrant was $ 264.80 (equal to the combined purchase price per Share and accompanying Common Warrant, minus $ 0.20 ). The Common Warrants can be exercised into either common stock or Pre-Funded Warrants at the holders' option, and both Common Warrants and Pre-Funded Warrants contain purchase rights that could result in holders receiving securities that more than offsets or neutralizes the effect of a distribution event. As a result of the aforementioned provisions, both Common Warrants and Pre-Funded Warrants fail the indexation guidance under ASC 815 and are classified as liabilities. The Pre-Funded Warrants and Common Warrants liabilities were recorded at fair value as of the issuance date and June 30, 2026, and subject to adjustment to estimated fair value at each balance sheet date until the warrants are settled. The proceeds from June 2025 Private Placement were first allocated to the full fair value of the Pre-Funded Warrants and Common Warrants due to the liability classification. The fair value of the Pre-Funded Warrants and Common Warrants at issuance was $ 10.7 million. The remaining proceeds of $ 0.8 million, before issuance costs, were allocated to the common stock. During the three and six months ended June 30, 2026, the Company recognized a fair value gain of $ 4.5 million and $ 35.6 million , respectively, related to the total warrants. 25 Table of Contents On January 29, 2026, all 10,000 shares of the Pre-Funded Warrants were exercised through a cashless exercise into 9,989 shares of the Company's common stock. In May 2026, all of the Common Warrants issued in connection with the June 2025 Private Placement were terminated in connection with the consummation of the Orphai Acquisition. Note 12. Stock-Based Compensation The Company operates three stock-based compensation plans as of June 30, 2026: • 2019 Equity Incentive Plan (Quince) • 2019 Equity Incentive Plan (Novosteo) • 2022 Inducement Plan (Quince) • 2013 Orphai Plan (Orphai) • 2026 Orphai Plan (Orphai) 2019 Equity Incentive Plan (Quince) On December 4, 2014, the Company’s stockholders approved the 2014 Stock Plan (“2014 Plan”), and on April 25, 2019 amended, restated and re-named the 2014 Plan as the 2019 Equity Incentive Plan (the “Quince 2019 Plan”), which became effective as of May 7, 2019, the day prior to the effectiveness of the registration statement filed in connection with the IPO. The remaining shares available for issuance under the 2014 Plan were added to the shares reserved for issuance under the Quince 2019 Plan. The Quince 2019 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Company’s employees, directors, and consultants. As of June 30, 2026, the maximum aggregate number of shares that may be issued under the Quince 2019 Plan is 78,309 shares of the Company’s common stock. In addition, the number of shares available for issuance under the Quince 2019 Plan will be annually increased on the first day of each fiscal years beginning with fiscal 2020, by an amount equal to the least of (i) 10,732 shares of common stock; (ii) 4 % of the outstanding shares of its common stock as of the last day of its immediately preceding fiscal year; and (iii) such other amount as the Board of Directors may determine. The Quince 2019 Plan may be amended, suspended or terminated by the Board of Directors at any time, provided such action does not impair the existing rights of any participant, subject to stockholder approval of any amendment to the Quince 2019 Plan as required by applicable law or listing requirements. Unless sooner terminated by the Company's Board of Directors, the Quince 2019 Plan will automatically terminate on April 23, 2029. As of June 30, 2026 , the Company had 10,510 shares available for future issuance under the Quince 2019 Plan. Stock Options Stock options under the Quince 2019 Plan may be granted for periods of up to 10 years and at prices no less than 100 % of the fair market value of the shares on the date of grant. If, at the time of grant, the optionee directly owns stocks representing more than 10 % of the voting power of all our outstanding capital stock, the exercise price for these options must be at least 110 % of the fair value of the underlying common stock. Stock options granted to employees and non-employees generally have a maximum term of ten years and vest over four years from the vesting commencement date, of which 25 % vest on the one-year anniversary of the vesting commencement date, and 75 % vest in equal monthly installments over the remaining three years or monthly vesting over 3 to 4 years. We may grant options with different vesting terms from time to time. Unless an employee's or non-employee's termination is due to cause, disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of the three months from the termination date or expiration of the option, whichever is earlier. 26 Table of Contents Activity for service-based stock options under the Quince 2019 Plan is as follows: Number of Options and Unvested Shares Weighted Average Exercise Price Weighted average remaining contractual life (years) Aggregate intrinsic value (In thousands) Balance as of December 31, 2025 51,454 $ 546.01 6.79 $ 18,844 Options granted 14,174 604.12 — — Options exercised — — — — Options cancelled / forfeited ( 8,598 ) 830.44 — — Balance as of June 30, 2026 57,030 $ 517.57 7.71 $ — Options vested and expected to vest as of June 30, 2026 57,030 517.57 7.71 — Options exercisable as of June 30, 2026 29,276 $ 622.97 6.83 $ — For the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of $ 0.7 million and $ 1.6 million , respectively, related to options granted to employees and non-employees. For the three and six months ended June 30, 2025, the Company recognized stock-based compensation expense of $ 0.8 million and $ 1.7 million, respectively, related to options granted to employees and non-employees. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. As of June 30, 2026, total unamortized employee stock-based compensation was $ 7.2 million , which is expected to be recognized over the remaining estimated vesting period of 1.2 years. The weighted average grant date fair value per share of stock options granted during the six months ended June 30, 2026 and 2025 was $ 507.87 and $ 419.35 , respectively. For the six months ended June 30, 2026 , in connection with the separation of employees as part of our restructuring activities, the Company extended the post-termination exercise window from 90 days to five years for separated employees and for those with consulting agreements allowed awards to continue vesting through term of the agreements. The Company recorded stock-based compensation expense related to the modification of these awards of $ 0.1 million. 2019 Equity Incentive Plan (Novosteo) On May 19, 2022, in accordance with the terms of Agreement and Plan of Merger and Reorganization between the Company, Novosteo, Inc., and the other parties thereto, the Company assumed the 2019 Novosteo, Inc. Equity Incentive Plan (the "2019 Novosteo Plan"). The 2019 Novosteo Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Novosteo legacy employees. On the closing date, each outstanding Novosteo stock option granted under Novosteo’s equity compensation plans was converted into a corresponding stock option with the number of shares underlying such option and the applicable exercise price adjusted based on the exchange ratio of 0.0911 . Each such converted stock option continues to be subject to substantially the same terms and conditions as applied to the corresponding Novosteo stock option prior to the acquisition. The maximum aggregate number of shares that may be issued under the 2019 Novosteo Plan is 2,725 shares of the Company’s common stock. The 2019 Novosteo Plan may be amended, suspended or terminated by the Board of Directors at any time, provided such action does not impair the existing rights of any participant, subject to stockholder approval of any amendment to the 2019 Novosteo Plan as required by applicable law or listing requirements. Unless sooner terminated by the Board of Directors, the 2019 Novosteo Plan will automatically terminate on May 20, 2029. Stock options under the 2019 Novosteo Plan may be granted for periods of up to 10 years and at prices no less than 100 % of the fair market value of the shares on the date of grant. If, at the time of grant, the optionee directly owns stocks representing more than 10 % of the voting power of all our outstanding capital stock, the exercise price for these options must be at least 110 % of the fair value of 27 Table of Contents the underlying common stock. Stock options granted to employees and non-employees generally have a maximum term of ten years and vest over four years from the vesting commencement date, of which 25 % vest on the one-year anniversary of the vesting commencement date, and 75 % vest in equal monthly installments over the remaining three years or monthly vesting over 3 to 4 years. We may grant options with different vesting terms from time to time. Unless an employee's or non-employee's termination is due to cause, disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of the three months from the termination date or expiration of the option, whichever is earlier. As of June 30, 2026 , the Company had 960 shares available for future issuance under the 2019 Novosteo Plan. Activity for service-based stock options under the 2019 Novosteo Plan is as follows: Number of Options and Unvested Shares Weighted Average Exercise Price Weighted average remaining contractual life (years) Aggregate intrinsic value (In thousands) Balance as of December 31, 2025 808 $ 110.00 6.23 $ 451 Options granted — — — — Options exercised — — — — Options cancelled / forfeited — — — — Balance as of June 30, 2026 808 $ 110.00 5.73 $ — Options vested and expected to vest as of June 30, 2026 808 110.00 5.73 — Options exercisable as of June 30, 2026 806 $ 110.00 5.73 $ — For the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of $ 0 and $ 44 thousand, respectively, related to options granted to employees and non-employees for the 2019 Novosteo Plan. For the three and six months ended June 30, 2025, the Company recognized stock-based compensation expense of $ 48 thousand and $ 97 thousand, respectively, related to options granted to employees and non-employees for the 2019 Novosteo Plan. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. As of June 30, 2026 , there was no total unamortized employee stock-based compensation. Restricted Stock Awards There was no restricted stock awards activity during the six months ended June 30, 2026. For the three and six months ended June 30, 2026 , the Company recognized no stock-based compensation expense related to restricted stock awards. For the three and six months ended June 30, 2025, the Company recognized stock-based compensation expense of $ 0.1 million and $ 0.2 million related to restricted stock awards. The compensation expense is allocated on a departmental basis, based on the classification of the award holder. No income tax benefits have been recognized in the condensed consolidated statement of operations and comprehensive loss for stock-based compensation arrangements. The fair value of vested restricted stock awards was $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2025, respectively. 2022 Inducement Plan On May 9, 2022, the Company's Board of Directors approved 20,000 shares of common stock, that may be offered or issued under the Quince Therapeutics, Inc. 2022 Inducement Plan (the "2022 Inducement Plan"). The 2022 Inducement Plan was adopted by the independent members of the Board of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules (“Nasdaq Rule 5635(c)(4)”). In accordance with Nasdaq Rule 5635(c)(4), awards under those plans may only be made to an employee who has not previously been an employee or member of the Board of Directors or of any board of directors of any parent or subsidiary of the Company, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted 28 Table of Contents such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The terms and conditions of the 2022 Inducement Plan are substantially similar to those of the Quince 2019 Plan. Options under the 2022 Inducement Plan may be granted for periods of up to 10 years at prices no less than 100 % of the fair market value of the shares on the date of grant. Options granted to employees may have different performance goals or other vesting provisions (including continued employment) in accordance with the applicable award agreement. Unless an employee's termination service is due to disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of the three months from the date of termination or expiration of the option, whichever is earlier. As of June 30, 2026, the Company had 8,333 shares available for future issuance under the 2022 Inducement Plan. Activity for service-based stock options under the 2022 Inducement Plan is as follows: Number of Options and Unvested Shares Weighted Average Exercise Price Weighted average remaining contractual life (years) Aggregate intrinsic value (In thousands) Balance as of December 31, 2025 11,667 $ 596.00 6.39 863 Options granted — — — — Options exercised — — — — Options cancelled / forfeited — — — — Balance as of June 30, 2026 11,667 $ 596.00 5.90 — Options vested and expected to vest as of June 30, 2026 11,667 596.00 5.90 — Options exercisable as of June 30, 2026 11,667 $ 596.00 5.90 — For the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of $ 0.2 million and $ 0.5 million , respectively, related to options granted to employees for the 2022 Inducement Plan. For the three and six months ended June 30, 2025, the Company recognized stock-based compensation expense of $ 0.3 million and $ 0.7 million, respectively, related to options granted to employees for the 2022 Inducement Plan. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. As of June 30, 2026 , there was no total unamortized employee stock-based compensation. Orphai Equity Incentive Plans In connection with the Orphai Acquisition, the Company assumed all outstanding and unexercised stock options previously granted by Orphai under its 2013 Employee, Director, and Consultant Equity Incentive Plan (the "2013 Orphai Plan"), as amended, and its 2026 Stock Incentive Plan (the "2026 Orphai Plan") (collectively, the "Orphai Equity Incentive Plans"), whether or not vested as of the acquisition date. Under the terms of the Merger Agreement, each Orphai stock option was converted into an option to purchase shares of the Company's common stock, with (i) the number of shares subject to each option determined by multiplying the number of shares subject to the original Orphai option by an exchange ratio of 0.6935 , rounded down to the nearest whole share, and (ii) the per-share exercise price determined by dividing the original per-share exercise price by the same exchange ratio. The vesting schedule and remaining contractual term of each replacement award were not modified in connection with the assumption, and no vesting was accelerated. Activity for service-based stock options under the 2013 Orphai Plan is as follows: 29 Table of Contents Number of Options and Unvested Shares Weighted Average Exercise Price Weighted average remaining contractual life (years) Aggregate intrinsic value (In thousands) Balance as of December 31, 2025 — $ — — — Options assumed 118,257 17.99 — — Options exercised — — — — Options cancelled / forfeited — — — — Balance as of June 30, 2026 118,257 $ 17.99 5.80 1,633 Options vested and expected to vest as of June 30, 2026 118,257 17.99 5.80 1,633 Options exercisable as of June 30, 2026 112,210 $ 18.85 5.65 1,535 For the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of $ 0.5 million , related to options granted to employees and non-employees. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. As of June 30, 2026, total unamortized employee stock-based compensation was $ 0.1 million , which is expected to be recognized over the remaining estimated vesting period of 0.13 years. The weighted average grant date fair value per share of stock options assumed during the six months ended June 30, 2026 was $ 19.59 . Activity for service-based stock options under the 2026 Orphai Plan is as follows: Number of Options and Unvested Shares Weighted Average Exercise Price Weighted average remaining contractual life (years) Aggregate intrinsic value (In thousands) Balance as of December 31, 2025 — $ — — — Options assumed 1,190,547 14.71 — — Options exercised — — — — Options cancelled / forfeited — — — — Balance as of June 30, 2026 1,190,547 $ 14.71 9.84 $ 4,141 Options vested and expected to vest as of June 30, 2026 1,190,547 14.71 9.84 4,141 Options exercisable as of June 30, 2026 657,144 $ 13.28 9.84 $ 3,224 For the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of $ 10.7 million , related to options granted to employees and non-employees. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. As of June 30, 2026, total unamortized employee stock-based compensation was $ 10.5 million , which is expected to be recognized over the remaining estimated vesting period of 1.38 years. The weighted average grant date fair value per share of stock options assumed during the six months ended June 30, 2026 was $ 19.80 . Stock-Based Compensation Expense The following table summarizes employee and non-employee stock-based compensation expense for the three and six months ended June 30, 2026 and 2025 and the allocation within the condensed consolidated statements of operations and comprehensive loss (in thousands): 30 Table of Contents Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 General and administrative expense $ 8,911 $ 835 $ 9,655 $ 1,785 Research and development expense 3,182 438 3,724 874 Total stock-based compensation $ 12,093 $ 1,273 $ 13,379 $ 2,659 Note 13. Income Taxes After considering all available positive and negative evidence, including cumulative losses, the Company concluded that it remains more likely than not that its net deferred tax assets will not be realized. Accordingly, the Company maintains a full valuation allowance against its net deferred tax assets. The Company recorded an income tax expense of $ 0.1 million for the three months ended June 30, 2026 and income tax benefit of $ 5.3 million for the six months ended June 30, 2026, primarily related to the discrete reversal of uncertain tax position liabilities associated with certain intellectual property following changes in facts and circumstances in the six months ended June 30, 2026 that affected the valuation of the intellectual property. This benefit was partially offset by current-period Italian income tax expense. The primary differences between the Company’s effective tax rate and the U.S. federal statutory tax rate were the change in valuation allowance and the discrete reversal of uncertain tax position liabilities. The Company recorded $ 67 thousand and $ 0.1 million of tax expense for the three and six months ended June 30, 2025 , respectively, primarily related to foreign withholding tax and interest on the uncertain tax position liability. Note 14. Net Loss Per Share Basic net loss per common share is determined by dividing the net loss by the weighted-average common shares outstanding during the period. The preferred shares do not have substantive preferential rights over common shares and are considered in-substance common shares and treated as a separate class of common stock for the purposes of computing earnings per share. Basic and diluted net loss per common share is determined by dividing the net loss by the weighted-average common shares outstanding during the period, as follows (net loss in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Numerator: Net loss $ ( 75,488 ) $ ( 16,049 ) $ ( 39,576 ) $ ( 31,079 ) Denominator: Weighted average shares of common stock and in-substance common stock outstanding 6,132,845 233,431 3,295,727 226,571 Net loss per share – basic and diluted $ ( 12.31 ) $ ( 68.75 ) $ ( 12.01 ) $ ( 137.17 ) The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the periods presented because including them would have been antidilutive: June 30, 2026 2025 Stock options issued and outstanding 1,378,309 64,000 Common warrants — 43,360 Acquisition Warrants 570,169 — Financing Warrants 3,749,231 — Pre-funded warrants — 10,000 Restricted stock awards — 149 Total 5,697,709 117,509 31 Table of Contents Note 15. Intangible Assets EryDel Intangible Assets The following table provides details of the carrying amount of the Company's indefinite-lived intangible asset (in thousands): (in thousands) In-process research and development: Balance as of December 31, 2025 $ 67,361 Impairment charges ( 67,361 ) Balance as of June 30, 2026 $ — The following table provides details of the carrying amount of the Company's finite-lived intangible asset (in thousands, except useful life): As of June 30, 2026 As of December 31, 2025 Useful life Cost Accumulated Amortization Net Carrying Value Cost Accumulated Amortization Net Carrying Value Finite life intangible assets: Trade name 21 years $ 460 ( 49 ) $ 411 $ 460 ( 26 ) $ 434 Foreign currency translation adjustments 36 ( 8 ) Impairment charges ( 447 ) — Total $ — $ 426 In January 2026, the Company ceased clinical development of eDSP as the primary and secondary endpoints did not achieve statistical significance in its Phase 3 NEAT clinical trial. As a result, several of the assumptions used in determining the initial fair value have changed including expected cash flows and thus triggered the need for an interim impairment assessment as required under ASC 350. As a result, the fair value was determined to be significantly below its carrying value and the Company recognized a total impairment charge of $ 67.8 million for indefinite and finite-lived intangible assets during the six months ended June 30, 2026 . Note 16. Segment Information The Company manages its business activities on a consolidated basis and operates as one operating and reportable segment for the purposes of assessing performance and making operating decisions. Operating segments are defined as components of an enterprise for which discrete financial information is available and is evaluated regularly by the CODM, in deciding how to allocate resources and assess performance. The Company’s Chief Executive Officer , who is the CODM, reviews financial information on a consolidated basis for purposes of allocating and evaluating financial performance. The CODM evalua tes the Company’s performance and resource allocation by analyzing consolidated net loss, as reported on the condensed consolidated statement of operations and comprehensive loss. This assessment involves comparing net loss across prior periods, the Company's forecast, and following the Orphai Acquisition, total expenditures related to LAM-001 product development. The measure of segment assets reviewed by the CODM is the consolidated total assets, as reported on the condensed consolidated balance sheets. The following table presents the measure of segment assets regularly provided to the CODM (in thousands): 32 Table of Contents June 30, 2026 December 31, 2025 Cash, cash equivalents and short-term investments 115,981 17,752 The following table presents financial information, including significant segment expenses, which are regularly provided to the CODM and included within condensed consolidated statements of operations and comprehensive loss (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Research and development: Personnel $ 2,105 $ 1,294 $ 4,019 $ 2,614 Stock-based compensation 3,182 438 3,724 873 Clinical and contract manufacturing 1,173 5,342 4,773 12,069 Other ( 999 ) ( 521 ) ( 210 ) ( 858 ) General and administrative: Personnel 2,102 1,038 3,438 2,765 Stock-based compensation 8,911 834 9,655 1,785 Consulting and professional costs 4,981 786 6,539 2,252 Other 632 684 1,261 1,329 Acquired in-process research and development 59,000 — 59,000 — Gain on Orphai Acquisition ( 1,305 ) — ( 1,305 ) — Intangible asset impairment charge — — 67,808 — Fair value adjustment for contingent consideration — 532 ( 64,330 ) 2,456 Total operating expenses 79,782 10,427 94,372 25,285 Loss from operations ( 79,782 ) ( 10,427 ) ( 94,372 ) ( 25,285 ) Fair value adjustment for debt — ( 501 ) 12,168 ( 945 ) Fair value adjustment for warrants 4,507 ( 4,464 ) 35,623 ( 4,464 ) Warrant issuance costs ( 874 ) ( 872 ) ( 874 ) ( 872 ) Other segment items 661 215 7,879 487 Net loss $ ( 75,488 ) $ ( 16,049 ) $ ( 39,576 ) $ ( 31,079 ) Other segment items within net loss include interest income, other income (expense), net, and income tax expense. The Company’s long-lived assets consist primarily of property, plant and equipment, net, and operating lease right-of-use assets are maintained in Italy. As of June 30, 2026 and December 31, 2025 , no individual country other than the U.S. accounted for 10% or more of these assets. 33 Table of Contents 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 unaudited condensed consolidated financial statements and related notes, included in “Part I. Item 1. Financial Statements” of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions, that are based on the beliefs of our management. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, as well as our Amendment No. 2 to Current Report on Form 8-K filed with the SEC on July 30, 2026. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to the “Company,” “Quince,” “we,” “us,” and “our” refer to Quince Therapeutics, Inc. and its consolidated subsidiaries, including Orphai Therapeutics, for periods after the Orphai Acquisition. Unless otherwise indicated, all share and per share information has been retroactively adjusted to reflect the 1-for-10 reverse stock split of our common stock that became effective on April 10, 2026 (the “April 2026 Reverse Stock Split”) and the 1-for-20 reverse stock split of our common stock that became effective on June 29, 2026 (the “June 2026 Reverse Stock Split” and, together with the April 2026 Reverse Stock Split, the “Reverse Stock Splits”). Overview We are a clinical-stage biopharmaceutical company developing a novel disease modifying therapeutic to address the significant unmet medical need associated with pulmonary disorders with few, if any, treatment options available. On May 18, 2026, we completed the acquisition of Orphai Therapeutics, LLC, a clinical-stage biotechnology company developing a novel disease modifying therapeutic to address the significant unmet medical need associated with pulmonary disorders with few, if any, treatment options available, in accordance with the terms of the Agreement and Plan of Merger, dated May 17, 2026 (the “Merger Agreement”), by and among the Company, Orphai, and the other parties thereto (the “Orphai Acquisition”). The acquisition brought into our pipeline Orphai’s lead asset, LAM-001, a proprietary investigational inhaled dry powder formulation of rapamycin whose differentiated characteristics may permit treatment of pulmonary conditions associated with dysfunctional mammalian target of rapamycin activity. Under the terms of the Merger Agreement, we assumed options to purchase Orphai common stock and were converted into options to purchase an aggregate of 1,308,804 shares of common stock, which options are subject to exercise restrictions prior to obtaining approval during a special meeting of stockholders. In addition, we issued to holders of Orphai warrants (the "Acquisition Warrants") to purchase an aggregate of 10,964.505 shares of Series C Preferred Stock (or 570,169 shares on an as-converted-to-common basis, and without giving effect to any beneficial ownership limitations), at an exercise price of $996.90 per share of Series C Preferred Stock (or $19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). On May 18, 2026, concurrent with the Orphai Acquisition, we entered into a securities purchase agreement (the “May 2026 Securities Purchase Agreement”) for a private placement financing with new and returning investors to raise up to $187.0 million in gross proceeds, which includes $115.0 million in gross upfront proceeds, net of $11.4 million of offering costs, commissions, legal and other expenses for net proceeds from the offering of $103.6 million and up to an additional approximately $72.0 million upon exercise of accompanying warrants (with an additional up to $11.0 million in gross proceeds available upon the exercise of warrants issued to former Orphai stockholders), in which the investors were issued approximately 144,200.633 shares of our Series C non-voting convertible preferred stock (the “Series C Preferred Stock”) (convertible into an aggregate of 7,498,447 shares of common stock, without giving effect to any beneficial ownership limitations) at a price of $797.50 per share and accompanying warrants (the “Financing Warrants”) to purchase up to 72,100.322 shares of Series C Preferred Stock (or 3,749,231 shares on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations) at an exercise price of $996.90 per share (or $19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split) (the “May 2026 Financing”). For 34 Table of Contents additional information on the Orphai Acquisition and the May 2026 Financing, see Note 3 to our unaudited condensed consolidated financial statements. Following the acquisition, our lead product candidate is LAM-001. We are currently evaluating the use of LAM-001 as a treatment for patients with pulmonary hypertension associated with interstitial lung disease (“PH-ILD”) and for patients with bronchiolitis obliterans syndrome post lung transplant (“BOS”), both severe, progressive and often life-threatening indications with few therapeutic alternatives of significant clinical benefit. In our recently completed Phase 2a trial, which enrolled patients with pulmonary arterial hypertension as well as patients with PH-ILD and sarcoidosis associated pulmonary hypertension (“SAPH”), LAM-001 achieved clinically relevant improvement across multiple established endpoints, including pulmonary vascular resistance, six-minute walking distance and functional class. A Phase 2b trial of LAM-001 is ongoing, evaluating 75 patients with PH-ILD, with data expected in the first quarter of 2028. A fully enrolled Phase 2 trial of LAM-001 in BOS is currently ongoing, with results anticipated in the first quarter of 2027. In addition, we expect to initiate a Phase 2 trial to evaluate the use of LAM-001 as a treatment for sarcoidosis-associated pulmonary hypertension in late 2026, with data expected in the fourth quarter of 2028. Prior to the Orphai Acquisition, our business was focused on developing our proprietary Autologous Intracellular Drug Encapsulation (“AIDE”) technology for the treatment of Ataxia-Telangiectasia (“A-T”) through our encapsulated dexamethasone sodium phosphate encapsulated in patient's own red blood cells (“eDSP”) product candidate. In January 2026, we completed our pivotal Phase 3 NEAT clinical trial of eDSP for the treatment of A-T. As previously disclosed, the primary endpoints of the NEAT trial did not reach statistical significance. Based on the results of the NEAT trial, we determined that we would no longer continue development of eDSP in this or other therapeutic indications, and we are currently considering next steps for the eDSP program and our other assets. Financial Overview We have incurred net losses from operations since our inception. As of June 30, 2026, we had an accumulated deficit of $500.0 million. While we generated a net income in the three months ended March 31, 2026, we do not expect to generate product revenue unless and until we obtain marketing approval for and commercialize a product candidate, and we cannot assure you that we will ever generate significant revenue or profits. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, initiate clinical trials of, and potentially seek marketing approval for, our product candidates. In addition, we expect to continue to incur significant costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. Components of Results of Operations Operating Expenses Our operating expenses since inception have consisted primarily of R&D activities and G&A costs. Research and Development Expenses Our research and development expenses consist of expenses incurred in connection with the research and development of our research programs. These expenses include payroll and personnel expenses, including stock-based compensation, for our research and product development employees, laboratory supplies, product licenses, consulting costs, contract research, regulatory, quality assurance, preclinical and clinical expenses, allocated rent, facilities costs and depreciation. We expense both internal and external research and development costs as they are incurred. Non-refundable advance payments and deposits for services that would be used or rendered for future research and development activities are recorded as prepaid expenses and recognized as an expense as the related services are performed. We anticipate that our research and development expenses will increase from current levels due to the Orphai Acquisition and the increase in headcount as the size of our business and research and development operations grows to support additional research and development activities. 35 Table of Contents General and Administrative General and administrative expenses consist principally of personnel-related costs, including payroll and stock-based compensation, for personnel in executive, finance, human resources, business and corporate development, and other administrative functions, professional fees for legal, consulting, insurance and accounting services, allocated rent and other facilities costs, depreciation, and other general operating expenses not otherwise classified as research and development expenses. We anticipate that our general and administrative expenses will increase from current levels due to the Orphai Acquisition and the increase in headcount as the size of our business and research and development operations grows to support additional research and development activities. Acquired in-process research and development Acquired in-process research and development expense consists of the fair value of in-process research and development ("IPR&D") acquired in connection with the Orphai Acquisition. As the acquired in-process research and development was determined to have no alternative future use, it was expensed on the acquisition date, in accordance with ASC 730. We do not expect to recognize acquired in-process research and development expense in future periods unless we complete additional acquisitions. Gain on Orphai Acquisition Gain on Orphai Acquisition represents the excess of the fair value of the net assets acquired, including IPR&D acquired, and net liabilities assumed in connection with the Orphai Acquisition over the fair value of consideration transferred, recognized as of the acquisition date. Intangible Asset Impairment Charge Finite-lived intangible asset consists primarily of the tradename and is amortized on a straight-line basis over their estimated useful lives. Indefinite lived intangible assets are not amortized. Intangible assets related to IPR&D acquired in a business combination or an acquisition that are used in IPR&D shall be considered indefinite lived until the completion or abandonment of the associated research and development efforts. IPR&D is not amortized but is tested for impairment annually or when events or circumstances indicate that the fair value may be below the carrying value of the asset. If the carrying value of the assets is not expected to be recovered, the assets are written down to their estimated fair values. As a result of the clinical readout of the Phase 3 NEAT study in January 2026, which led us to discontinue development of eDSP, several of the assumptions used in determining the initial fair value changed including expected cash flows and thus triggered the need for an interim impairment assessment. As a result, the fair value was determined to be significantly below its carrying value and we recognized a total impairment charge of $67.8 million for for indefinite and finite-lived intangible assets during the six months ended June 30, 2026. Fair Value Adjustment for Contingent Consideration We record fair value adjustment for contingent consideration primarily due to the expected timing of achieving various milestones, and the passage of time related to the contingent consideration earnout resulting from the acquisition of EryDel on October 20, 2023 (the "EryDel Acquisition"). Changes in the fair value of the contingent consideration obligations may result from changes in probability assumptions with respect to the likelihood of achieving the various contingent payment obligations. As a result of the clinical readout of the Phase 3 NEAT study in January 2026, which led us to discontinue development of eDSP, the criteria for the contingent consideration payments will not be met, resulting in the related liability being reduced to zero. Fair Value Adjustment for Debt We record fair value adjustment for debt primarily due to the passage of time and the interest accrued for the loan with the European Investment Bank ("EIB"). In March 2026, the EIB agreed to a full settlement of all obligations associated with the loan with a single payment of 4.8 million euros ($5.5 million) which was paid on March 30, 2026. 36 Table of Contents Fair Value Adjustment for Warrants We record fair value adjustment for warrant liability calculated using the Black-Scholes option pricing model, adjustments are due to changes in our stock price, the expected term, volatility, risk-free interest rate, and expected dividends. Warrant Issuance Costs Warrant issuance costs consist of expenses incurred in connection with the Financing Warrants, which are classified as liabilities. Interest Income Interest income consists primarily of interest earned on our short-term investments portfolio. Other Income (Expense), net Other income (expense), net consists primarily of the effects of foreign currency exchange rates. Critical Accounting Estimates For a description of our significant accounting policies, see Note 2 to our unaudited condensed consolidated financial statements. Of our policies, the following are considered critical to an understanding of our condensed consolidated financial statements as they require the application of subjective and complex judgment, involving critical accounting estimates and assumptions impacting our condensed consolidated financial statements: • Research and Development Expenses • Impairment of Intangible Assets • Contingent Consideration • Debt • Warrant Liability • Income Taxes • Business Combination For a discussion about the other critical accounting estimates and assumptions impacting our condensed consolidated financial statements, see the Critical Accounting Estimates section within MD&A of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on April 10, 2026. 37 Table of Contents Results of Operations Comparison of the three months ended June 30, 2026 to the three months ended June 30, 2025 The following sets forth our results of operations for the three months ended June 30, 2026 and 2025 (in thousands, except for percentages): For the Three Months Ended June 30, Change 2026 2025 $ % Operating expenses: Research and development $ 5,461 $ 6,553 $ (1,092 ) (17 )% General and administrative 16,626 3,342 13,284 397 % Acquired in-process research and development 59,000 — 59,000 Gain on Orphai Acquisition (1,305 ) — (1,305 ) Fair value adjustment for contingent consideration — 532 (532 ) (100 )% Total operating expenses 79,782 10,427 69,355 665 % Loss from operations (79,782 ) (10,427 ) (69,355 ) 665 % Fair value adjustment for debt — (501 ) 501 (100 )% Fair value adjustment for warrants 4,507 (4,464 ) 8,971 (201 )% Warrant issuance costs (874 ) (872 ) (2 ) 0 % Interest income 584 311 273 88 % Other expense, net 152 (29 ) 181 (624 )% Net loss before income tax expense (75,413 ) (15,982 ) (59,431 ) 372 % Income tax benefit (expense) (75 ) (67 ) (8 ) 12 % Net loss $ (75,488 ) $ (16,049 ) $ (59,439 ) 370 % Research and Development Expenses (in thousands, except for percentages): Three Months Ended June 30, Change 2026 2025 $ % Direct research and development expenses: eDSP $ (736 ) $ 4,641 $ (5,377 ) (116 )% LAM-001 831 — 831 Other direct research costs (16 ) 102 (118 ) (116 )% Indirect research and development expenses: Personnel related (including stock-based compensation) 5,287 1,731 3,556 205 % Facilities and other research and development expenses 95 79 16 20 % Total research and development expenses $ 5,461 $ 6,553 $ (1,092 ) (17 )% Research and development expenses were $5.5 million for the three months ended June 30, 2026, compared to $6.6 million for the three months ended June 30, 2025, a decrease of $1.1 million. The costs for eDSP development decreased by $5.4 million compared to the same period from the prior year due to the ramping down related to our Phase 3 NEAT clinical trial and Open-Label Extension Clinical Trial ("OLE") as well as a gain on the settlement of accounts payable. This decrease was primarily due to a gain on settlement of accounts payable of $1.1 million, as well as a decrease in clinical trial costs of $3.5 million, a decrease in eDSP consulting of $1.1 million, and a decrease in manufacturing costs of $0.2 million, offset by an increase of R&D expenses of $0.5 million related to the reserve and adjustment for R&D tax credits. 38 Table of Contents The costs for LAM-001 development increased by $0.8 million during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, due to the Orphai Acquisition as a result of the start-up costs of LAM-001. Our personnel related costs increased by $3.6 million during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, mainly as a result of an increase of $2.7 million in allocated stock-based compensation costs and a $0.9 million increase in other personnel related expenses, including costs related to Orphai Acquisition and severance costs related to personnel separation. General and Administrative Expenses General and administrative expenses increased by $13.3 million to $16.6 million for the three months ended June 30, 2026, from $3.3 million for the three months ended June 30, 2025. The increase in general and administrative expenses was primarily due to $9.1 million in allocated stock-based compensation and personnel related expenses primarily due to the assumptions of the Orphai historical options upon acquisition, an increase of $4.4 million in consulting and professional costs related to activities related to restructuring and the Orphai Acquisition, offset by $0.2 million related to other professional and administrative costs. Fair Value Adjustment for Contingent Consideration For the three months ended June 30, 2026, the fair value adjustment for contingent consideration decreased by $0.5 million as we recorded a fair value adjustment for contingent consideration as a result of the clinical readout of the Phase 3 NEAT study in January 2026. Fair Value Adjustment for Debt For the three months ended June 30, 2026, the fair value adjustment for the debt decreased by $0.5 million primarily due to the settlement of the loan with the EIB in March 2026. Fair Value Adjustment for Warrants For the three months ended June 30, 2026, we recorded an increase of $9.0 million fair value adjustment for warrants primarily due to the issuance of the Acquisition and Financing Warrants, exercise of the Pre-Funded Warrants, cancellation of the Common warrants, and changes in the price of the underlying stock. Interest Income Interest income increased by $0.3 million for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The change was due to increased yields on our investment portfolio and increased average balances. Other Expense, net Other income (expense), net increased by $0.2 million for the three months ended June 30, 2026 primarily due to unrealized gains from foreign currency translation. Income Tax Expense We recorded a tax expense of $75 thousand and $67 thousand for the three months ended June 30, 2026 and 2025, respectively. The tax expense was primarily due to the current-period Italian income tax expense. 39 Table of Contents Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025 The following sets forth our results of operations for the six months ended June 30, 2026 and 2025 (in thousands, except for percentages): For the Six Months Ended June 30, Change 2026 2025 $ % Operating expenses: Research and development $ 12,306 $ 14,698 $ (2,392 ) (16 )% General and administrative 20,893 8,131 12,762 157 % Acquired in-process research and development 59,000 — 59,000 Gain on Orphai Acquisition (1,305 ) — (1,305 ) Intangible asset impairment charge 67,808 — 67,808 Fair value adjustment for contingent consideration (64,330 ) 2,456 (66,786 ) (2719 )% Total operating expenses 94,372 25,285 69,087 273 % Loss from operations (94,372 ) (25,285 ) (69,087 ) 273 % Fair value adjustment for debt 12,168 (945 ) 13,113 (1388 )% Fair value adjustment for warrants 35,623 (4,464 ) 40,087 (898 )% Warrant issuance costs (874 ) (872 ) (2 ) 0 % Interest income 744 717 27 4 % Other income (expense), net 1,871 (116 ) 1,987 (1713 )% Net loss before income tax expense (44,840 ) (30,965 ) (13,875 ) 45 % Income tax benefit (expense) 5,264 (114 ) 5,378 (4718 )% Net loss $ (39,576 ) $ (31,079 ) $ (8,497 ) 27 % Research and Development Expenses (in thousands, except for percentages): Six Months Ended June 30, Change 2026 2025 $ % Direct research and development expenses: eDSP $ 2,933 $ 10,868 $ (7,935 ) (73 )% LAM-001 831 — 831 Other direct research costs 649 179 470 263 % Indirect research and development expenses: Personnel related (including stock-based compensation) 7,743 3,487 4,256 122 % Facilities and other research and development expenses 150 164 (14 ) (9 )% Total research and development expenses $ 12,306 $ 14,698 $ (2,392 ) (16 )% Research and development expenses were $12.3 million for the six months ended June 30, 2026, compared to $14.7 million for the six months ended June 30, 2025, a decrease of $2.4 million. The costs for eDSP development decreased by $7.9 million compared to the same period from the prior year due to the ramping down related to our Phase 3 NEAT clinical trial and OLE as well as a gain on the settlement of accounts payable. This decrease was primarily due to a gain on settlement of accounts payable of $3.7 million as well as a decrease in clinical trial costs of $5.3 million, a decrease in eDSP consulting of $1.5 million, and a decrease in manufacturing costs of $0.6 million, offset by an increase of R&D expenses of $3.2 million related to the reserve and adjustment for R&D tax credits. The costs for LAM-001 development increased by $0.8 million during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, due to the Orphai Acquisition as a result of the start-up costs of LAM-001. 40 Table of Contents Personnel related costs increased by $4.3 million during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, mainly as a result of an increase of $2.9 million in allocated stock-based compensation costs and a $1.4 million increase in other personnel related expenses, including costs related to Orphai Acquisition and severance costs related to personnel separation. General and Administrative Expenses General and administrative expenses increased by $12.8 million to $20.9 million for the six months ended June 30, 2026, from $8.1 million for the six months ended June 30, 2025. The increase in general and administrative expenses was primarily due to $8.5 million in allocated stock-based compensation and personnel related expenses primarily due to the assumptions of the Orphai historical options upon acquisition, and an increase of $4.3 million in consulting and professional costs related to the restructuring activities. Intangible Asset Impairment Charge During the six months ended June 30, 2026, we conducted an impairment analysis of our intangible asset IPR&D and tradename that resulted from the EryDel Acquisition in October 2023. We conducted a quantitative analysis which resulted in our fair value being significantly below our current carrying value due to the assumptions changing as a result of the Phase 3 NEAT study in January 2026. As a result of the analyses, we recorded a non-cash intangible asset impairment charge of $67.8 million for the six months ended June 30, 2026. Fair Value Adjustment for Contingent Consideration For the six months ended June 30, 2026, we recorded a $64.3 million fair value adjustment for contingent consideration as a result of the clinical readout of the Phase 3 NEAT study in January 2026. Fair Value Adjustment for Debt For the six months ended June 30, 2026, we recorded a $12.2 million fair value adjustment for the debt primarily due to the settlement of the loan with the EIB in March 2026. Fair Value Adjustment for Warrants For the six months ended June 30, 2026, we recorded an increase of $40.1 million in fair value adjustment for warrants primarily due to timing of issuance of the Acquisition and Financing Warrants and change in the price of our common stock. Interest Income Interest income increased by $27 thousand for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The change was due to increased yields on our investment portfolio and increased average balances. Other Income (Expense), net Other income (expense), net increased by $2.0 million for the six months ended June 30, 2026, primarily due to unrealized gains from foreign currency translation. Income Tax Benefit (Expense) We recorded $5.3 million of tax benefit for the six months ended June 30, 2026 and tax expense of $0.1 million for the six months ended June 30, 2025. The tax benefit was primarily related to discrete release of uncertain tax position liabilities associated with certain intellectual property following changes in facts and circumstances in the six months ended June 30, 2026 that affected the valuation of the intellectual property. 41 Table of Contents Liquidity and Capital Resources We have not generated any revenue and we have never been profitable. To date, we have financed our operations primarily through the issuance and sale of our securities. From inception through June 30, 2026, we received net proceeds of approximately $345.7 million from the issuance of redeemable convertible preferred stock, convertible promissory notes, common warrants, pre-funded warrants, and common stock. We have incurred net losses from operations since our inception. As of June 30, 2026, we had an accumulated deficit of $500.0 million. While we generated a net income in the three months ended March 31, 2026, we do not expect to generate product revenue unless and until we obtain marketing approval for and commercialize a product candidate, and we cannot assure you that we will ever generate significant revenue or profits. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, initiate clinical trials of, and potentially seek marketing approval for, our product candidates. In addition, we expect to continue to incur significant costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. The timing and amount of our operating expenditures will depend largely on: • the initiation, progress, timing, costs and results of current and future preclinical studies and clinical trials for our current and future product candidates; • the cost and timing of the manufacture of additional clinical trial material as well as any costs related to the scale-up of manufacturing activities; • the costs to seek regulatory approvals for any product candidates that successfully complete clinical trials; • the need to hire additional clinical, quality assurance, quality control and other scientific personnel; • the number and characteristics of product candidates that we develop or may in-license; • the outcome, timing and cost of meeting and maintaining compliance with regulatory requirements; • the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights; • the terms of any collaboration agreements we may choose to enter into, including the achievement of milestones or occurrence of other developments that trigger payments under any license or collaboration agreements we might have at such time; • the cost associated with the expansion of our operational, financial and management systems and increased personnel, including personnel to support our operations as a public company; and • the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize. We evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that our unaudited condensed consolidated financial statements are issued. Concurrent with the Orphai Acquisition, in May 2026, we completed the May 2026 Financing, providing $115.0 million in upfront proceeds, with the potential to receive up to an additional $72.0 million in gross proceeds upon the exercise of the Financing Warrants (with an additional up to $11.0 million in gross proceeds available upon the exercise of warrants issued to former Orphai stockholders). The Series C Preferred Stock is subject to automatic conversion into common stock upon the third business day following our receipt of stockholder approval in accordance with Nasdaq Listing Rules, subject to certain beneficial ownership limitations. The Certificate of Designation of Preferences, Rights and Limitations of the Series C Non-Voting Convertible Preferred Stock (the “Certificate of Designation”) provides that, at any time following the earlier of (i) stockholder approval or (ii) six months after the initial issuance of the Series C Preferred Stock, if we fail to timely deliver shares of common stock to a converting holder in accordance with the terms of the Certificate of Designation, such holder may require us to pay cash in an amount equal to the fair value of the undelivered shares. As a result, we concluded that the proceeds received from the May 2026 Financing cannot be relied upon to mitigate conditions that raise substantial doubt because the availability of those proceeds is subject to conditions that are not 42 Table of Contents entirely within our control. The conversion of the Series C Preferred Stock into common stock and therefore removal of the requirement to make cash payment based on the value of the undelivered shares is subject to the vote of our stockholders. Our ability to satisfy these potential cash settlement obligations associated with the Series C Preferred Stock is not entirely within our control, as it is contingent on, among other things, our ability to obtain stockholder approval and to deliver shares of common stock upon conversion within the timeframes required by the Certificate of Designation. If we are unable to obtain stockholder approval in a timely manner, or are otherwise unable to timely deliver shares of common stock upon conversion, holders who submit conversion notices after the applicable trigger date could require us to make significant cash payments that could substantially reduce our available cash resources. Factoring in these potential cash payments, based on our current operating plan, we believe that our cash and cash equivalents balance will not be sufficient to fund operations and capital expenditures for at least the twelve months following the issuance of our unaudited condensed consolidated financial statements. Accordingly, we concluded that substantial doubt about our ability to continue as a going concern continues to exist within one year after the date our financial statements are available to be issued. Our future capital requirements will depend on many factors, including: • the scope, progress, results and costs of product discovery, preclinical studies and clinical trials; • the scope, prioritization and number of our research and development programs; • the costs, timing and outcome of regulatory review of our product candidates; • our ability to establish and maintain collaborations on favorable terms, if at all; • the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under collaboration agreements, if any; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • the extent to which we acquire or in-license other product candidates and technologies; • the costs of securing manufacturing arrangements for commercial production; and • the costs of establishing or contracting for sales and marketing capabilities if we obtain regulatory approvals to market our product candidates. Our cash, cash equivalents, and marketable debt securities are held in a variety of deposit accounts, interest-bearing accounts, U.S government securities, debt securities in government-sponsored entities, and money market funds. Cash in excess of immediate requirements, if any, is invested with a view toward liquidity and capital preservation, and we seek to minimize the potential effects of concentration and credit risk. Our cash equivalents and short-term investments are held in money market funds and government agency obligations. Until such time, if ever, as we can generate product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we raise funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. 43 Table of Contents Financing Equity Financing ATM Program On December 18, 2024, we entered into a Controlled Equity Offering SM Sales Agreement, with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC (the "Agents"), relating to the sale of shares of our common stock. In accordance with the terms of this agreement, we could offer and sell up to $21.9 million of shares of common stock. In October 2025, we increased the total amount available under the ATM program to $75.0 million. During the three and six months ended June 30, 2026, we utilized our ATM program to raise net proceeds of approximately $5.4 million and $20.3 million by issuing 125,500 shares and 526,435 shares of common stock, respectively. As of June 30, 2026, $47.5 million remained available to be sold under the ATM program. May 2026 Private Placement On May 18, 2026, concurrent with the Orphai Acquisition, we entered into the May 2026 Securities Purchase Agreement for a private placement financing with new and returning investors to raise up to $187.0 million in gross proceeds, which includes $115.0 million in upfront proceeds and up to an additional approximately $72.0 million upon exercise of the Financing Warrants, in which the investors were issued approximately 144,200.633 shares of Series C Preferred Stock (convertible into an aggregate of 7,498,447 shares of common stock, without giving effect to any beneficial ownership limitations) at a price of $797.50 per share and Financing Warrants to purchase up to 72,100.322 shares of Series C Preferred Stock (or 3,749,231 shares, on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations) at an exercise price of $996.90 per share (or $19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). For additional information on the May 2026 Financing, see Note 10 to our unaudited condensed consolidated financial statements. June 2025 Private Placement On June 12, 2025, we entered into a Securities Purchase Agreement (the “June 2025 Securities Purchase Agreement”), with certain institutional investors (the “Investors”) and certain members of our management (together with the Investors, the “Purchasers”) pursuant to which we issued and sold to the Purchasers in a private placement (the “Private Placement”): (i) 33,360 shares (the “Shares”) of our common stock, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 10,000 shares of common stock, and (iii) accompanying warrants to purchase up to an aggregate of 43,360 shares of common stock (the “Common Warrants”), for aggregate gross proceeds of approximately $11.5 million (excluding up to approximately $10.4 million of aggregate gross proceeds that may be received in the future upon the cash exercise in full of the Common Warrants issued in the Private Placement), before deducting placement agent fees and other expenses payable by us. Each Share and each Pre-Funded Warrant sold pursuant to the Securities Purchase Agreement was accompanied by one Common Warrant. The combined purchase price of each Share and accompanying Common Warrant was $265.00 (which included $25.00 per Common Warrant in accordance with the rules and regulations of Nasdaq). The combined purchase price of each Pre-Funded Warrant and accompanying Common Warrant was $264.80 (equal to the combined purchase price per Share and accompanying Common Warrant, minus $0.20). Debt In connection with the acquisition of EryDel on October 20, 2023, we guaranteed the EIB Loan. The EIB Loan was amended and restated as of the acquisition date. The EIB Loan provided for maximum borrowings of 30.0 million euro through four tranches; tranche A, 3.0 million euro; tranche B, 7.0 million euro; tranche C, 10.0 million euro; and tranche D, 10.0 million euro. Each tranche was subject to conditions precedent related to our business and capitalization. Only tranches A and B were drawn. All amounts under tranche A and B were payable on their maturity date of August 2026. Interest accrued at fixed rates for each tranche and both principal and interest was payable on the maturity date for each tranche (with the exception of 2% cash interest which was accrued and payable 44 Table of Contents quarterly during fiscal year 2025 pursuant to the terms of the Amendment (as defined below), which correspondingly reduced the deferred interest rate accruing during such period). The fixed rates ranged from 7.0% to 9.0% per annum. On March 27, 2026, we entered into a loan settlement agreement (the “Settlement Agreement”) with the EIB in connection with the EIB loan. Pursuant to the Settlement Agreement, effective immediately upon our payment of 4.8 million euros ($5.5 million), our outstanding obligations to the EIB were settled in full and all of our obligations were satisfied and discharged. Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below (in thousands): For the Six Months Ended June 30, 2026 2025 Change Net cash (used in) provided by: Operating activities $ (26,514 ) $ (21,016 ) $ (5,498 ) Investing activities 20,001 16,937 3,064 Financing activities 118,376 14,499 103,877 Effect of exchange rate changes on cash (1,691 ) 194 (1,885 ) Net increase in cash and cash equivalents $ 110,172 $ 10,614 $ 99,558 Operating Activities Net cash used in operating activities decreased by $5.5 million during the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to lower operating payments driven by decreased clinical development activities. Net cash used in operating activities was $26.5 million for the six months ended June 30, 2026. Cash used in operating activities was primarily due to our net loss of $39.6 million for the period, adjusted for $23.0 million of non-cash items, including $67.8 million non-cash impairment on intangible assets, $64.3 million change in the fair value of contingent consideration liabilities, $59.0 million acquired in-process research and development from the Orphai Acquisition, $35.6 million change in the fair value of warrants, $13.4 million in stock-based compensation, $12.2 million change in the fair value of the EIB Loan, $3.7 million in gain on settlement of accounts payable, and a net increase in our operating assets of $1.1 million and a net increase in our accounts payable, and accrued expenses and other current liabilities of $8.9 million. Investing Activities Cash provided by investing activities was $20.0 million for the six months ended June 30, 2026, primarily related to the proceeds from maturities of short-term investments of $12.0 million and the net cash assumed in the Orphai Acquisition of $8.0 million. Cash provided by investing activities was $16.9 million for the six months ended June 30, 2025, primarily related to the maturities of short-term investments of $31.0 million, and the purchase of investments of $13.8 million. Financing Activities Cash provided by financing activities was $118.4 million for the six months ended June 30, 2026, which consisted of $103.6 million of proceeds from the issuance of Series C Preferred Stock and Financing Warrants pursuant to the May 2026 Private Placement, $20.3 million from the issuance of common stock in connection with the ATM offerings, offset by the repayment of debt of $5.5 million. Cash used in financing activities was $14.5 million for the six months ended June 30, 2025, which consisted of gross proceeds of $11.5 million from the issuance of common stock, common warrants, and pre-funded warrants in connection with June 2025 Private Placement, $2.9 million from the issuance of common stock in connection with the ATM offerings, and $0.2 million from the exercise of stock options in the period. 45 Table of Contents Contractual Obligations and Commitments Our contractual obligations primarily consist of our obligations under non-cancellable operating leases and other purchase obligations. We enter into contracts in the normal course of business with third party contract organizations for clinical trials, non-clinical studies and testing, manufacturing, and other services and products for operating purposes. The amount and timing of the payments under these contracts varies based upon the timing of the services. We have recorded accrued expense of approximately $3.9 million in our condensed consolidated balance sheets for expenditures incurred by these vendors as of June 30, 2026. Our cancellable future operating expense commitments based on existing contracts as of June 30, 2026 is $2.5 million. These obligations will be satisfied in the normal course of business, but generally no longer than 12 months. In March 2026, we entered into a Settlement Agreement with the EIB to settle our outstanding obligations in full with a single payment of 4.8 million euros ($5.5 million). Following such payment, all of our obligations to the EIB were satisfied and discharged. Additionally, in March 2026, it was determined that the criteria for the contingent consideration payouts will not be met, resulting in the related liability being reduced to zero. As of June 30, 2026, the fair value of warrants issued in connection with the June 2025 and May 2026 private placements is $6.3 million. In addition, our future capital requirements will depend on, among other things, the timing of stockholder approval of the Company Stockholders Matters (as defined in the Merger Agreement as the “Parent Stockholder Matters”) and the potential cash settlement obligations that may arise if we are unable to timely deliver shares of our common stock upon conversion of the Series C Preferred Stock issued in connection with the Orphai Acquisition and the May 2026 Financing. The Series C Preferred Stock is subject to automatic conversion into common stock upon the third business day following our receipt of stockholder approval in accordance with Nasdaq Listing Rules, subject to certain beneficial ownership limitations. The Certificate of Designation of Preferences, Rights and Limitations of the Series C Non-Voting Convertible Preferred Stock (the “Certificate of Designation”) provides that, at any time following the earlier of (i) stockholder approval or (ii) six months after the initial issuance of the Series C Preferred Stock, if we fail to timely deliver shares of common stock to a converting holder in accordance with the terms of the Certificate of Designation, such holder may require us to pay cash in an amount equal to the fair value of the undelivered shares. Our ability to satisfy these potential cash settlement obligations is not entirely within our control, as it is contingent on, among other things, our ability to obtain stockholder approval and to deliver shares of common stock upon conversion within the timeframes required by the Certificate of Designation. If we are unable to obtain stockholder approval in a timely manner, or are otherwise unable to timely deliver shares of common stock upon conversion, holders who submit conversion notices after the applicable trigger date could require us to make significant cash payments that could substantially reduce our available cash resources. Additionally, even following stockholder approval, certain holders may be unable to convert their Series C Preferred Stock due to the application of beneficial ownership limitations. Shares of Series C Preferred Stock that are not converted in the automatic conversion on account of beneficial ownership limitations will remain outstanding until converted at the option of the applicable holders, and the cash settlement provisions described above would apply to any failure to timely deliver conversion shares in connection with any such optional conversion. Item 3. Qua ntitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are not required to provide the information required under this item. Item 4. Co ntrols and Procedures. Evaluation of Disclosure Controls and Procedures Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, communicated to our management to allow timely decisions regarding required disclosure, summarized and reported within the time periods specified in the SEC's rules and forms. Any disclosure controls and 46 Table of Contents procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Under the supervision and with the participation of our management, including the Chief Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of June 30, 2026. Based on that evaluation, the Chief Executive Officer and Principal Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective. Changes in Internal Control over Financial Reporting Except as set forth below, there have been no changes in our internal control over financial reporting during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. On May 18, 2026, we completed our acquisition of Orphai, as further described in Note 3 to the condensed consolidated financial statements included elsewhere in this Quarterly Report. In connection with the acquisition, we have begun the process of integrating Orphai’s financial processes, systems, and personnel into our system of internal control over financial reporting during the three months ended June 30, 2026. We expect this integration to continue through the remainder of 2026 and to result in changes to our internal control over financial reporting. 47 Table of Contents PART II—OTHER INFORMATION Item 1. Le gal Proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of business. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors. Item 1A. Risk Fa ctors. In addition to the other information set forth below and elsewhere in this report, you should carefully consider the risks described below, as well as general economic and business risks and the other information herein. The occurrence of any of the events or circumstances described below or other adverse events could have a material adverse effect on our business, results of operations and financial condition and could cause the trading price of our common stock to decline. Additional risks or uncertainties not presently known to us or that we currently deem immaterial may also harm our business. SUMMARY OF RISK FACTORS The risk factors summarized below could materially harm our business, operating results, and/or financial condition, impair our future prospects, and/or cause the price of our common stock to decline. These risks are discussed more fully below. Material risks that may affect our business, financial condition, results of operations, and trading price of our common stock include the following: • We have a limited operating history, have incurred net losses since our inception, and anticipate that we will incur significant losses for the foreseeable future. We may never generate any revenue or become profitable or, if we achieve profitability, may not be able to sustain it. • If we are unable to raise additional capital when needed, we may be forced to delay, reduce or eliminate our product development programs or other operations. • We need substantial additional funding to complete the development of our product candidates. A failure to obtain this necessary capital when needed could force us to further delay, limit, reduce or terminate our product development or commercialization efforts. • We have incurred significant losses every year since our inception. We expect to continue to incur losses over the next several years and may never achieve or maintain profitability. • Our development efforts are in the early stages. If we are unable to advance our product candidates through clinical development, obtain regulatory approval and ultimately commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed. • Our business is highly dependent on the success of LAM-001. LAM-001 will require additional clinical and manufacturing development before we may be able to seek regulatory approval for and launch a product commercially and we may not be successful in our efforts. • If the clinical trials of any of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA or other comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates. • Interim data from our clinical trials that we announce or publish from time to time may change as more patients are enrolled and additional data become available. • We will depend on timely enrollment of patients in our clinical trials for our product candidates. If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected. • Clinical trials are difficult to design and implement, can be lengthy and expensive, involve uncertain outcomes and may not ultimately be successful. 48 Table of Contents • We rely, and expect to continue to rely, on third parties to conduct the preclinical and clinical trials for our product candidates, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or failing to comply with applicable regulatory requirements. • If the FDA does not conclude that LAM-001 satisfies the requirements for the Section 505(b)(2) regulatory approval pathway, or if the requirements under Section 505(b)(2) are not as we expect, the approval pathway for LAM-001 will likely take significantly longer, cost significantly more and entail significantly greater complications and risks than anticipated and may not be successful. • If we are unable to establish sales, marketing and distribution capabilities for our product candidates, or enter into sales, marketing and distribution agreements with third parties, we may not be successful in commercializing our product candidates, if approved. • We operate in a rapidly changing industry and face significant competition, which may result in others discovering, developing or commercializing products before or more successfully than we do. • Even if any of our product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success. • The success of our product candidates will depend on several factors, including obtaining and maintaining patent and trade secret protection and/or regulatory exclusivity for our product candidates. • If we are unable to obtain and maintain patent protection for our technologies and product candidates, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and product candidates may be impaired. • Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could significantly harm our business. • There is no guarantee that the Acquisition will increase stockholder value. • Pursuant to the terms of the Acquisition and related 2026 Private Placement, we are required to recommend that our stockholders approve the conversion of all outstanding shares of our Series C Preferred Stock into shares of our common stock. We must also obtain stockholder approval of an amendment to our certificate of incorporation to increase the number of shares we are authorized to issue. We cannot guarantee that our stockholders will approve these matters, and if they fail to do so we may be required to settle such shares in cash and our operations would be materially harmed. • Our failure or perceived failure to comply with data privacy and security obligations including our experiencing security incidents could harm our business. Compliance or the actual or perceived failure to comply with such obligations could increase our costs and otherwise negatively affect our operating results and business. • The failure to successfully integrate the businesses of Quince and Orphai in the expected timeframe could adversely affect our results of operations, financial condition, and future results. Risks Related to Our Financial Position and Need for Additional Capital We have a limited operating history and have a history of significant losses since our inception. We may incur losses over the next several years and may never achieve or maintain profitability. We are a clinical-stage biopharmaceutical company with a limited operating history that may make it difficult to evaluate the success of our business to date and to assess the future viability of our business prospects. Our operations to date have been limited to business planning, including the Acquisition, organizing and staffing our company, raising capital, identifying potential product candidates, conducting clinical trials and preclinical studies for our development programs, entering into licensing agreements, establishing and enhancing our intellectual property portfolio, and providing general and administrative support for these operations. We have a history of significant net losses since our inception. Our net loss was $39.6 million and $31.1 million for six months ended June 30, 2026 and 2025, respectively, and $84.0 million and $56.8 million for the years ended December 31, 2025 and 2024, respectively. As of June 30, 2026 and as of December 31, 2025, we had an accumulated deficit of $500.0 million and $460.5 million, respectively. We have funded our operations to date primarily with proceeds from the sale of our equity securities and borrowings of convertible debt. 49 Table of Contents We have no products approved for commercial sale, have not generated any revenue from commercial sales of our product candidates, and are devoting substantially all of our financial resources and efforts to the research and development of LAM-001. Investment in clinical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and/or become commercially viable. We expect that it will take at least several years until any of our product candidates receive marketing approval and are commercialized, and we may never be successful in obtaining marketing approval and commercializing product candidates. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. These net losses will adversely impact our stockholders’ equity and net assets and may fluctuate significantly from quarter to quarter and year to year. To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. Achievement will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our product candidates, obtaining regulatory approval, manufacturing, marketing and selling any products for which we may obtain regulatory approval, as well as discovering and developing additional product candidates. We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability. Because of the numerous risks and uncertainties associated with the development and commercialization of therapeutic product candidates, we are unable to accurately predict the timing or amount of expenses or when, or if, we will be able to achieve and maintain profitability. If we are required by regulatory authorities to perform studies in addition to those currently expected, or if there are any delays in the initiation and completion of our clinical trials or the development of any of our product candidates, our expenses could increase and profitability could be further delayed. Even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our common stock and could impair our ability to raise capital, expand our business, maintain our research and development efforts or continue our operations. A decline in the value of our common stock could also cause you to lose all or part of your investment. Our operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability. As an organization, we have not demonstrated an ability to successfully complete clinical trials, obtain regulatory approvals, manufacture our product candidates at commercial scale or arrange for a third party to do so on our behalf, conduct sales and marketing activities necessary for successful commercialization, or obtain reimbursement in the countries of sale. We may encounter unforeseen expenses, difficulties, complications, and delays in achieving our business objectives. Our operating history makes any assessment of our future success or viability subject to significant uncertainty, particularly with respect to the Acquisition. If we do not address these risks successfully or are unable to transition at some point from a company with a research and development focus to a company capable of supporting commercial activities, then our business will suffer. We will need substantial additional funding to complete the development of our product candidates. A failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts. Since our inception, we have used substantial amounts of capital to fund the development of our product candidates and operations. We expect our research and development expenses to increase in connection with our ongoing activities, particularly as our product candidates enter and advance through preclinical studies and clinical trials. We will require substantial additional funding to meet our financial needs and to pursue our business objectives. We will require significant additional capital to, among other things: • complete our ongoing and planned clinical trials, preclinical studies and IND-enabling activities; • initiate, enroll, and complete additional clinical trials for our product candidates; • seek and obtain regulatory approvals for our product candidates; 50 Table of Contents • build and maintain our manufacturing capabilities or enter into third-party manufacturing arrangements; • expand and protect our intellectual property portfolio; and • fund our general and administrative operations. In addition, if we obtain marketing approval for any of our product candidates, we will incur significant commercialization expenses related to marketing, sales, administration and manufacturing and distribution. Failure to raise capital as and when needed would have a negative impact on our financial condition and ability to develop our product candidates. Furthermore, we cannot be certain that additional funding will be available on acceptable terms. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of our product candidates or other research and development initiatives, and any of our current or future license agreements may be terminated if we are unable to meet the payment or other obligations under the agreements. Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates. We expect that significant additional capital may be needed in the future to continue our planned operations, including conducting clinical trials, commercialization efforts, research and development activities and costs associated with operating a public company. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through any or a combination of securities offerings, debt financings, license and collaboration agreements and research grants. If we raise capital through securities offerings, such sales are likely to result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock. To the extent that we raise additional capital through the sale of equity, warrants to purchase equity, and/or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing and preferred equity financing, if available, could result in fixed payment obligations, and we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. In addition, we could also be required to seek funds through arrangements with collaborators or others at an earlier stage than otherwise would be desirable. If we raise funds through research grants, we may be subject to certain requirements, which may limit our ability to use the funds or require us to share information from our research and development. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to a third party to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Raising additional capital through any of these or other means could adversely affect our business and the holdings or rights of our stockholders, and may cause the market price of our common stock to decline. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional funds through collaboration and licensing arrangements with third parties, we may have to relinquish some rights to our technologies or our product candidates on terms that are not favorable to us. Any additional capital raising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our current and future product candidates, if approved. If we are unable to raise capital when needed or on attractive terms, we could be forced to further delay, reduce or altogether cease our research and development programs or future commercialization efforts. 51 Table of Contents Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises such as pandemics, political crises, geopolitical events, or other macroeconomic conditions, which have in the past and may in the future negatively impact our business and financial performance. The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including, among other things, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates and uncertainty about economic stability, due to reasons including, among other things, geopolitical conflicts, political changes and trends such as protectionism, economic nationalism resulting in government actions impacting international trade agreements or imposing trade restrictions such as tariffs and retaliatory counter measures. A widespread public health crisis such as a pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity. In addition, a recession or market correction resulting from the effects of public health crises could materially affect our business and the value of our common stock. It may have further negative impacts, such as (a) a global or U.S. recession or other economic crisis; (b) credit and capital markets volatility (and access to these markets, including by our suppliers and customers); (c) manufacturing supply disruption due to travel restrictions or other government actions; (d) disruptions in raw material supply, our manufacturing operations, or in our distribution and supply chain; and (e) our ability to conduct planned clinical trials and commercialization activities. The ultimate impact of a public health crisis is highly uncertain. Fluctuating interest rates, coupled with reduced government spending and volatility in financial markets, may increase economic uncertainty and affect consumer spending. If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs. Our financial results have been in the past and may in the future be adversely affected by impairment charges from the recording of goodwill and intangible assets. Our financial results have been in the past and may in the future be adversely affected by impairment charges from the recording of goodwill and intangible assets incurred in connection with acquisitions. For example, during the quarter ended June 30, 2024, we incurred a $17.1 million goodwill impairment charge in connection with the EryDel Acquisition. Further, our failure to identify or accurately assess the magnitude of necessary technology investments we assumed as a result of the EryDel Acquisition could result in unexpected litigation or regulatory exposure, unfavorable accounting charges, a loss of anticipated tax benefits or other adverse effects on our business, operating results or financial condition. We recognized a total impairment charge of $67.8 million for indefinite and finite-lived intangible assets for the six months ended June 30, 2026 related to the negative outcome of the NEAT study. Our failure to maintain certain tax benefits applicable to Italian biotechnology companies may adversely affect our results of operations, our cash flows and our financial condition. We have benefited from certain tax advantages related to our Italian biotechnology subsidiary, including, for example, the R&D tax credit, which is an Italian tax credit aimed at stimulating research and development. The R&D tax credit can offset payments of certain taxes and contributions (e.g., social contributions, VAT payables, registration fees, income and withholding taxes and all other tax-related items that companies usually pay monthly). For eligible research and development activities, the tax credits were equal to 20% of the costs incurred in fiscal years 2022 and 2021, with a maximum annual amount of $4.4 million (4 million euros). In 2023 the general R&D tax credit rate was decreased to 10% of the eligible expenses for certain activities, and the annual ceiling of the credit increased to $5.5 million (5 million euros). In 2023 to 2025, we generated R&D tax credit under Article 31 of Decree-Law No. 73/2021, for Pharmaceutical/Vaccine R&D tax credit, which has tax credits equal to 20% of cost incurred in the fiscal year and annual ceiling of the credit of $23.4 million (20 million euros). Expenses incurred for years ended December 31, 2025, 2024, and 2023 generated a total tax credit amounting to $1.9 million (1.7 million euros), $1.7 million (1.6 million euros), and $0.9 million (0.8 million euros), respectively. The Italian tax authorities may audit each research and development program in respect of which a R&D tax credit has been claimed and assess whether such program qualifies in its view for the R&D tax credit. The Italian tax authorities may challenge 52 Table of Contents our eligibility for, or our calculation of, certain tax reductions or deductions in respect of our research and development activities. Should the Italian tax authorities be successful, the R&D tax credit, may be reduced, which would have a negative impact on our results of operations and future cash flows. We believe, due to the nature of our business operations, that we will continue to be eligible to receive the R&D tax credit. However, if the Italian government decides to eliminate, or to reduce the scope or the rate of, the R&D tax credit, either of which it could decide to do at any time, our results of operations could be adversely affected. Risks Related to the Development of our Product Candidates Our development efforts are in the early stages. If we are unable to advance LAM-001 or any other product candidates through clinical development, obtain regulatory approval and ultimately commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed. There is no assurance that any clinical trials of LAM-001, or any other product candidates we may develop will be successful or will generate positive clinical data and we may not receive marketing approval from the FDA or other regulatory agencies for any such product candidate. LAM-001 is in the early stage of our development efforts, and if it, or any product candidate that we may develop, encounters safety or efficacy problems, development delays, regulatory issues or other problems, our development plans and forecasted timelines and business could be significantly harmed. We initiated a Phase 2b clinical trial of LAM-001 in PH-ILD in July 2026. Additionally, an investigator-initiated Phase 2 clinical trial of LAM-001 in BOS is being conducted, and we expect to initiate a Phase 2 clinical trial of LAM-001 in SAPH in late 2026. Biopharmaceutical development is a long, expensive and uncertain process, and delay or failure can occur at any stage of any of our clinical trials. Failure to obtain regulatory approval for our product candidates will prevent us from commercializing and marketing our product candidates. The success in the development of our product candidates will depend on many factors, including: • initiating, enrolling, and completing clinical trials; • submission of INDs for and receipt of allowance to proceed with our clinical trials or other future clinical trials; • completing preclinical studies; • obtaining positive results from our preclinical studies and clinical trials that support a demonstration of efficacy, safety, and durability of effect for our product candidates; • receiving approvals for commercialization of our product candidates from applicable regulatory authorities; • establishing sales, marketing and distribution capabilities and successfully launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; • acceptance of our products, if and when approved, by patients, the medical community and third-party payors; • manufacturing our product candidates at an acceptable cost and quality; and • maintaining and growing an organization of scientists, medical professionals and business people who can develop and commercialize our product candidates and technology. Many of these factors are beyond our control, including the time needed to adequately complete clinical testing and the regulatory submission process. It is possible that none of our product candidates will ever obtain regulatory approval, even if we expend substantial time and resources seeking such approval. If we do not achieve one or more of these factors in a timely manner or at all, or any other factors impacting the successful development of biopharmaceutical products, we could experience significant delays or an inability to successfully develop our product candidates, which could materially harm our business. 53 Table of Contents The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time-consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for LAM-001 or any other product candidate we may develop, our business will be substantially harmed. We do not have any products that have gained regulatory approval. Our business is substantially dependent on our ability to obtain and maintain regulatory approval for our development products, in particular LAM-001. We cannot commercialize product candidates in the United States without first obtaining regulatory approval for the product from the FDA. Before obtaining regulatory approvals for the commercial sale of any product candidate for a particular indication, we must demonstrate with substantial evidence gathered in preclinical and clinical studies that the product candidate is safe and effective for that indication and that the manufacturing facilities, processes and controls are adequate to ensure sufficient product quality and control with respect to such product candidate. Prior to seeking approval for any of our product candidates, we will need to confer with the FDA and other regulatory authorities regarding the design of our clinical trials, the type and amount of clinical data necessary, the Chemistry, Manufacturing and Controls, or CMC, requirements to seek and gain approval for our product candidates. The time required to obtain approval by the FDA and other regulatory authorities is unpredictable and typically takes many years following the commencement of preclinical studies and clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. It is possible that none of our existing product candidates or any future product candidates will ever obtain regulatory approval. Our product candidates could fail to receive regulatory approval from the FDA or other comparable regulatory authorities for many reasons, including: • disagreement with the design, protocol or conduct of our clinical trials; • failure to demonstrate that a product candidate is safe and effective for its proposed indication; • failure of clinical trials to meet the level of statistical significance required for approval; • failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; • disagreement with our interpretation of data from preclinical studies or clinical trials; • insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of an NDA or other submission or to obtain regulatory approval; • failure to obtain approval of the manufacturing processes, or failure to obtain such approvals with respect to our facilities or the facilities of our contract manufacturing vendors; • deficiencies in our CMC package, including inadequate characterization of the drug substance or drug product, insufficient control strategy, incomplete validation of manufacturing processes or analytical methods, or unresolved comparability, impurity, stability or specification issues, may delay or prevent approval; • we may be unable to demonstrate that our manufacturing processes can be consistently scaled, validated and controlled to produce product candidates that meet applicable identity, strength, quality, purity and potency requirements; • our analytical methods, release testing, reference standards or stability data may be insufficient to support product specifications, shelf life, storage conditions or commercial manufacturing approval; • manufacturing facilities operated by us or our third-party manufacturers may fail to satisfy current good manufacturing practice, or cGMP, requirements or may be subject to inspectional observations, warning letters, import alerts or other regulatory actions that could delay or prevent approval; • changes in raw materials, suppliers, manufacturing sites, equipment, processes or specifications may require additional comparability, validation or bridging data and could result in delay in regulatory review or approval; • changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval; or • lack of adequate funding to complete a clinical trial in a manner that is satisfactory to the applicable regulatory authority. 54 Table of Contents Many of these risks are beyond our control, including the risks related to clinical development. If we are unable to develop, receive regulatory approval for, or successfully commercialize our product candidates, or if we experience delays as a result of any of these risks or otherwise, our business could be materially harmed. The FDA or a comparable regulatory authority may require more information, including additional preclinical or clinical data to support approval, including data that would require us to perform additional clinical trials or modify our manufacturing processes, controls, specifications, labeling, instructions or packaging, which may delay or prevent approval and our commercialization plans, or we may decide to abandon the development program. Further, if we change the primary or secondary endpoints in any of our clinical trials, either by our own choice or at the request of the FDA or a comparable regulatory authority, our development plans could be delayed, our costs could increase and our business could be materially harmed. If we change our manufacturing processes, we may be required to conduct additional clinical trials or other studies, which also could delay or prevent approval of our product candidates. If we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer indications than we request (including failing to approve the most commercially promising indications), may limit indications, may grant approval contingent on the performance of costly post-marketing clinical trials or other post-marketing commitments, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Even if a product candidate were to successfully obtain approval from the FDA or other comparable regulatory authorities in other jurisdictions, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements. If we are unable to obtain regulatory approval for one of our product candidates in one or more jurisdictions, or any approval contains significant limitations, we may not be able to obtain sufficient funding to continue the development of that product candidate or generate revenues attributable to that product candidate. Also, any regulatory approval of our current or future product candidates, once obtained, may be withdrawn. Our business is highly dependent on the success of LAM-001. LAM-001 will require additional clinical and manufacturing development before we may be able to seek regulatory approval for and launch a product commercially and we may not be successful in our efforts. We currently have no products that are approved for commercial sale and may never be able to develop marketable products. We are devoting substantially all our resources to the development of LAM-001 across our three target indications of PH-ILD, BOS (in post-lung transplant patients) and SAPH. Our existing clinical data for LAM-001 in PH-ILD is derived from a completed, open-label Phase 2a clinical trial with a limited number of evaluable patients. In addition, an investigator-initiated double-blind Phase 2 clinical trial in BOS and a company-sponsored double-blind Phase 2b trial in PH-ILD are ongoing, each with a limited number of evaluable patients. If LAM-001, across the various target indications, encounters safety or efficacy problems, development delays, regulatory issues or other problems, our development plans and forecasted timelines and business could be significantly harmed. Because substantially all of our resources are concentrated on a single product candidate, any failure or significant delay in LAM-001’s development would have a disproportionate impact on our business, financial condition and prospects, and we do not have other clinical-stage programs that could offset such a setback. We cannot provide you with any assurance that we will be able to successfully advance LAM-001 or any additional product candidates through the development process in any particular target indication. Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development or commercialization for many reasons, including the following: • our product candidates may not succeed in preclinical or clinical testing; • a product candidate may on further study be shown to have harmful side effects, or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria; • competitors may develop alternatives that render our product candidates obsolete or less attractive; • product candidates we develop may nevertheless be covered by third parties’ patents or other exclusive rights; 55 Table of Contents • the market for a product candidate may change during our development program so that the continued development of that product candidate is no longer reasonable; • a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and • a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors, if applicable. If any of these events occur, we may be forced to abandon our development efforts for a program or programs, or we may not be able to identify, discover, develop, or commercialize additional product candidates, which could have a material adverse effect on our business and could potentially cause us to cease operations. If we do not successfully develop and commercialize product candidates or collaborate with others to do so, we will not be able to obtain product revenue in future periods, which could significantly harm our financial position and adversely affect the trading price of our common stock. If the clinical trials of any of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA or other comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates. Before obtaining regulatory approvals for the commercial sale of our product candidates, we must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that our product candidates are safe, of sufficient purity and effective for use in each target indication, and failures can occur at any stage of testing. Preclinical studies and clinical trials often fail to demonstrate safety or efficacy of the product candidate studied for the target indication. A failure of one or more clinical trials can occur at any stage of testing. Any side effects or patient deaths could affect the development of our product candidates, even if deemed to not be drug related. If any such adverse events occur, our clinical trials could be suspended or terminated. If we cannot demonstrate that any adverse events were not caused by the drug, the FDA or foreign regulatory authorities could order us to cease further development of, or deny approval of, our product candidates for any or all targeted indications. Even if we are able to demonstrate that all future serious adverse events are not product-related, such occurrences could affect patient recruitment or the ability of enrolled patients to complete the trial. Moreover, if we elect, or are required, to not initiate, delay, suspend or terminate any future clinical trial of any of our product candidates, the commercial prospects of such product candidates may be harmed and our ability to generate product revenues from any of these product candidates may be delayed or eliminated. Any of these occurrences may harm our ability to develop other product candidates, and may harm our business, financial condition and prospects significantly. We may experience numerous unforeseen events prior to, during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize any of our product candidates, including: • the FDA or other comparable regulatory authority may disagree as to the number, design or implementation of our clinical trials, or may not interpret the results from clinical trials as we do; • regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may not reach agreement on acceptable terms with prospective clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different clinical trial sites; • clinical trials of our product candidates may produce negative or inconclusive results; • we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials or abandon our product development programs; • the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or we may fail to recruit suitable patients to participate in a trial; 56 Table of Contents • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • regulators may issue a clinical hold, or regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; • the cost of clinical trials of our product candidates may be greater than we anticipate; • the FDA or other comparable regulatory authorities may fail to approve our manufacturing processes or facilities, or the facilities of our contract manufacturing vendors; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; • deficiencies in our CMC package, including inadequate characterization of the drug substance or drug product, insufficient control strategy, incomplete validation of manufacturing processes or analytical methods, or unresolved comparability, impurity, stability or specification issues, may delay or prevent approval • we may be unable to demonstrate that our manufacturing processes can be consistently scaled, validated and controlled to produce product candidates that meet applicable identity, strength, quality, purity and potency requirements; • our analytical methods, release testing, reference standards or stability data may be insufficient to support product specifications, shelf life, storage conditions or commercial manufacturing approval; • manufacturing facilities operated by us or our third-party manufacturers may fail to satisfy current good manufacturing practice, or cGMP, requirements or may be subject to inspectional observations, warning letters, import alerts or other regulatory actions that could delay or prevent approval; • changes in raw materials, suppliers, manufacturing sites, equipment, processes or specifications may require additional comparability, validation or bridging data and could result in delay in regulatory review or approval; • our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the clinical trials; and • the approval policies or regulations of the FDA or other comparable regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval. To the extent that the results of the trials are not satisfactory for the FDA or regulatory authorities in other countries or jurisdictions to approve our NDAs or other comparable applications, the commercialization of our product candidates may be significantly delayed, or we may be required to expend significant additional resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates. Clinical trials are difficult to design and implement, can be lengthy and expensive, involve uncertain outcomes and may not ultimately be successful. It is impossible to predict when or if any of our current or future product candidates will prove effective and safe in humans or will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical studies and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Human clinical trials are expensive, can take many years to complete, and are difficult to design and implement, in part because they are subject to rigorous regulatory requirements. The design of a clinical trial can determine whether its results will support approval of a product and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. As an organization, we have limited experience designing clinical trials and may be unable to design and execute a clinical trial to support regulatory approval. There is a high failure rate for serious pulmonary disorder product candidates proceeding through clinical trials. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. In addition, we may experience regulatory delays or rejections as a result of many factors, including changes in regulatory policy during the period of our product candidate development. Any such delays could negatively impact our business, financial condition, results of operations and prospects. 57 Table of Contents Negative outcomes or data integrity failures by competitors in the serious pulmonary disorder space could adversely affect our business, reputation, and the regulatory and commercial environment in which we operate. The clinical and commercial success of LAM-001 may be influenced not only by our own data and results, but also by the outcomes and perceived integrity of data generated by competitors operating in the same therapeutic area. If a competitor’s product or product candidate is withdrawn from the market, subject to a safety recall, or associated with serious adverse events, whether in clinical trials or following regulatory approval, patients, physicians, payers, and the broader medical community may develop a generalized skepticism or loss of confidence in the underlying treatment modality or target mechanism. This loss of confidence could reduce patient enrollment in our clinical trials, dampen physician adoption of our products, or cause payers to impose more restrictive coverage and reimbursement policies, regardless of whether our products share the specific deficiencies identified in the competitor’s product. We have no control over the research, development, manufacturing, or commercial practices of our competitors in the respiratory disease space, and we cannot predict whether their data or products will meet the standards expected by regulators, the medical community, or the public. Any of the foregoing events could have a material adverse effect on our business, financial condition, results of operations, and prospects. We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or have a greater likelihood of success. Because we have limited financial and management resources, we focus on research programs and product candidates that we identify for specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. For example, we are currently focusing the majority of our efforts on the development of LAM-001, and specifically for the clinical indications of PH-ILD, BOS and SAPH. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products. Success in preclinical studies or clinical trials may not be predictive of results in future clinical trials. Results from preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of clinical trials are not necessarily predictive of final results. We do not know whether our candidates will be effective for the intended indications or safe in humans. Our product candidates may fail to show the desired safety and efficacy in preclinical or clinical development despite positive results observed in early preclinical studies or having successfully advanced through initial clinical trials. Any failure to establish sufficient efficacy and safety could cause us to abandon clinical development of our product candidates. Further, our clinical trials to date have involved small patient populations. Because of the small sample sizes, the results of these trials may not be indicative of results of future clinical trials. Interim topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more patients are enrolled and additional data become available, and are subject to audit and verification procedures that could result in material changes in the final data. We expect to publish from time to time interim topline or preliminary data from our clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Preliminary or topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. 58 Table of Contents As a result, interim and preliminary data should be viewed with caution until the final data are available. From time to time, we may also disclose interim data from our clinical trials. Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available or as patients from our clinical trials continue other treatments for their disease. Adverse differences between preliminary or interim data and final data could significantly harm our reputation and business prospects. Further, disclosure of interim data by us or by our competitors could result in volatility in the price of our common stock. Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the potential of the particular program, the likelihood of marketing approval or commercialization of the particular product candidate, any approved product, and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is derived from information that is typically extensive, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure. If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition. Since the number of patients that have been and will be dosed in our completed and ongoing clinical trials of LAM-001 is small, the results from such clinical trials may be less reliable than or may not be predictive of results achieved in larger clinical trials, which may hinder our efforts to obtain regulatory approval for LAM-001. The preliminary results of clinical trials with smaller sample sizes can be disproportionately influenced by various biases associated with the conduct of small clinical trials, such as the potential failure of the smaller sample size to accurately depict the characteristics of the broader patient population, which limits the ability to generalize the results across a broader community, thus making the clinical trial results less reliable than clinical trials with a larger number of patients. Our completed Phase 1 clinical trial of LAM-001 enrolled seven patients in the initial dosing period, with only three patients continuing through an optional 84-day extension period. Our Phase 2a clinical trial in PH, PH-ILD and pulmonary sarcoidosis enrolled ten patients, of whom only six completed the full 24-week trial period. The ongoing Phase 2 clinical trial of LAM-001 in BOS has enrolled 19 patients. The small number of patients enrolled in each of these trials limits the statistical power of our results and increases the potential for any individual patient outcome to disproportionately influence our overall findings. As a result, there may be less certainty that LAM-001 would achieve a statistically significant effect in any future clinical trials. Of particular note, our clinical thesis for evaluating LAM-001 as a potential treatment for SAPH is supported in part by observations from a single patient with sarcoidosis-associated pulmonary hypertension enrolled in our Phase 2a clinical trial. We intend to initiate a Phase 2 clinical trial specifically to evaluate LAM-001 as a treatment for SAPH; however, there can be no assurance that the results observed in this single patient will be replicated in a broader patient population. In addition, the ongoing Phase 2 clinical trial of LAM-001 for BOS is an investigator-sponsored trial, over which we have limited control with respect to trial conduct, protocol amendments, data access and publication decisions. We may rely in part on the results of this investigator-sponsored trial to inform our future clinical development decisions and allocation of resources for LAM-001 in BOS; however, if those results are not indicative of data that would be generated in a larger, company-sponsored clinical trial, our assumptions in support of our clinical development activities may prove to be inaccurate and the FDA or other comparable regulatory authorities may require us to conduct additional and larger clinical trials than we currently plan. If we conduct any future clinical trials of LAM-001 or our other product candidates, we may not achieve a positive or statistically significant result or the same level of statistical significance, if any, that we might have anticipated based on prior results from our completed or ongoing trials. Such failure could hinder our efforts to obtain regulatory approval for LAM-001 or our other product candidates. 59 Table of Contents The comparisons we present regarding LAM-001’s safety and efficacy profile relative to oral rapamycin are subject to significant limitations and may not be predictive of LAM-001’s relative performance in future controlled studies. Herein, and in our other public communications, we present data comparing LAM-001’s pharmacokinetics, mechanism of action and emerging clinical profile to published data of oral rapamycin. These comparisons are derived from different preclinical studies and clinical trials of both LAM-001 and oral rapamycin conducted at different times, with differences in trial design, patient populations, disease settings, dosing regimens, endpoints, sample sizes, follow-up periods, and adverse event grading criteria. No head-to-head clinical trials have been conducted comparing LAM-001 to rapamycin, and cross-trial comparisons are inherently limited and may not accurately reflect the relative safety or efficacy of the agents being compared. Physicians, patients, investors, and regulatory authorities may draw conclusions from these cross-trial comparisons that are not supported by the underlying data, or may discount LAM-001’s potential based on the inherent limitations of such comparisons. If LAM-001’s clinical profile does not compare as favorably to oral rapamycin as our cross-trial analyses suggest, the commercial prospects and perceived differentiation of LAM-001 could be materially diminished. We depend on timely enrollment of patients in our clinical trials for our product candidates. If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected. Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the study until its conclusion. The enrollment of patients depends on many factors, including: • the patient eligibility criteria defined in the protocol; • the number of patients with the disease or condition being studied; • the perceived risks and benefits of the product candidate in the trial; • clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating or drugs that may be used off-label for these indications; • clinicians’ and patients’ perceptions as to any risks associated with our competitors’ product candidates; • the size and nature of the patient population required for analysis of the trial’s primary endpoints; • the proximity of patients to study sites; • the design of the clinical trial; • our ability to recruit clinical trial investigators with the appropriate competencies and experience; • competing clinical trials for similar therapies or other new therapeutics; • our ability to obtain and maintain patient consents; • the risk that patients enrolled in clinical trials will drop out of the clinical trials before completion of their treatment; • factors we may not be able to control, such as pandemics, that may limit patients, principal investigators or staff or clinical sites available; • delays in activating clinical trial sites, including delays related to site contracting, budgeting, institutional review board or ethics committee approvals, training or initiation activities; • high screen failure rates, including as a result of narrow eligibility criteria, required diagnostic confirmation or other protocol-specific requirements; • competition from approved therapies, standard-of-care alternatives or other treatment options that may reduce patients’ willingness to enroll in our clinical trials; 60 Table of Contents • the burden on patients participating in our clinical trials, including visit frequency, travel requirements, monitoring obligations, procedures, follow-up requirements or other protocol-related demands; • the availability of specialized testing, biomarkers or diagnostic tools needed to identify or confirm eligible patients; • our ability to enroll a sufficiently diverse and representative patient populations across demographics, disease characteristics or geographies to support regulatory review; • patient retention, protocol adherence and timely completion of trial visits and procedures, including missed visits, noncompliance or withdrawal of consent; and • site staffing constraints, investigator turnover or limited clinical trial infrastructure. In addition, because the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which could further reduce the number of patients who are available for our clinical trials in these clinical trial sites. Delays in patient enrollment may result in increased costs or may affect the timing or outcome of the clinical trials, which could prevent completion of these clinical trials and adversely affect our ability to advance the development of our product candidates. In addition, many of the factors that may lead to a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. Our projections of addressable market opportunity for LAM-001 are based on estimates and assumptions that may prove incorrect, and the actual commercial opportunity may be substantially smaller than we expect. We have made internal estimates of the total addressable market for LAM-001 and other product candidates targeting the mTOR pathway, including estimates of patient populations, treatment penetration rates, and potential pricing. These estimates are based on a variety of sources, including published scientific literature, epidemiological data, market research and our own calculations and assumptions about competitive dynamics. However, these estimates are inherently uncertain and may prove to be materially incorrect. The actual addressable market for LAM-001 may be smaller than we estimate for several reasons, including: the subset of patients who meet the clinical criteria likely required for treatment with LAM-001 may be smaller than what we project; physicians may not adopt LAM-001 over established therapies; payors may restrict reimbursement; LAM-001 may initially be approved only for later-line treatment settings with smaller patient populations; competing products may capture significant market share before LAM-001 reaches the market; and advances in respiratory disease therapies may further segment the patient population. If the actual market opportunity for LAM-001 is materially smaller than our estimates, we may not be able to generate sufficient revenue to justify our development investment, which could have a material adverse effect on our business and financial condition. Adverse side effects or other safety risks associated with our product candidates could delay or preclude approval, cause us to suspend or discontinue clinical trials, cause us to abandon product candidates, could limit the commercial profile of an approved label, or could result in significant negative consequences following any potential marketing approval. Our clinical trials will include patients suffering from serious pulmonary disorders, mainly PH-ILD, BOS and SAPH, who are very sick and whose health is deteriorating. It is possible that some of these patients may experience side effects during our clinical trials. Further, systemic mTOR inhibitors, including approved rapalogs such as everolimus and temsirolimus, have been associated with numerous adverse events, including opportunistic infections, urinary tract infection, upper respiratory tract infection, nasopharyngitis, pneumonia, pneumocystis carinii pneumonia, pyelonephritis, sepsis, herpes simplex infection, herpes zoster, BK virus-associated nephropathy, progressive multifocal leukoencephalopathy, latent viral infection reactivation, tuberculosis, basal cell carcinoma, squamous cell carcinoma, melanoma, lymphoma, neuroendocrine carcinoma of the skin (Merkel cell carcinoma); hypersensitivity reactions: anaphylactic/anaphylactoid reactions, hypersensitivity vasculitis; hypertension; peripheral edema; angioedema edema; fluid accumulation; ascites; pericardial effusion; tachycardia; venous thromboembolism (including pulmonary embolism, deep venous thrombosis); hemolytic uremic syndrome/thrombotic thrombocytopenic purpura/thrombotic microangiopathy HUS/TTP/TMA; interstitial lung disease (including pneumonitis, bronchiolitis obliterans organizing pneumonia, and pulmonary fibrosis); non-infectious 61 Table of Contents pneumonitis; bronchial anastomotic dehiscence; increased creatinine; decline in renal function; proteinuria; nephrotic syndrome; focal segmental glomerulosclerosis; hypercholesterolemia: hypertriglyceridemia, hyperlipidemia; diabetes mellitus; increased AST/SGOT; increased ALT/SGPT; hyperglycemia; hypokalemia; anemia; leukopenia; neutropenia; thrombocytopenia; pancytopenia; arthralgia; myalgia; bone necrosis; hepatotoxicity (including fatal hepatic necrosis); hepatic artery thrombosis; lymphocele; lymphedema; posterior reversible encephalopathy syndrome; ovarian cysts; menstrual disorders (including amenorrhea, menorrhagia); azoospermia; increased lactate dehydrogenase; headache; dizziness; fever; pain; abdominal pain; constipation; diarrhea; nausea; stomatitis; acne; rash; exfoliative dermatitis; abnormal/impaired wound healing. While we believe the inhaled route of administration of LAM-001 may reduce systemic exposure relative to orally administered rapamycin, we cannot be certain that toxicity will not occur. This risk may be of particular significance in our target patient populations of patients with PH-ILD, BOS and SAPH whose underlying pulmonary conditions may make them more susceptible to mTOR-associated toxicities. If these or other adverse effects occur with unacceptable frequency or severity in our clinical trials, our ability to develop and commercialize LAM-001 could be materially impaired. Further, patients may die during our clinical trials for various reasons. The causes of death could include receiving our product candidates, because the patient’s disease is too advanced or because the patient experiences medical problems that may not be related to our product candidate. Even if the patient deaths are not related to our product candidate, the deaths could affect perceptions regarding the safety of our product candidates. Patient deaths and severe side effects caused by our product candidates, or by products or product candidates of other companies that are thought to have similarities with our product candidates, could result in the delay, suspension, clinical hold or termination of our clinical trials, by the FDA or other regulatory authorities for a number of reasons. If we elect or are required to delay, suspend or terminate any clinical trial of any product candidates that we develop, the commercial prospects of such product candidates will be harmed and our ability to generate product revenues from any of these product candidates would be delayed or eliminated. Serious adverse events observed in clinical trials could hinder or prevent market acceptance of the product candidate at issue. Any of these occurrences may harm our business, prospects, financial condition and results of operations significantly. Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such products, including during any long-term follow-up observation period recommended or required for patients who receive treatment using our products, a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw or limit their approval of such products; • regulatory authorities may require the addition of labeling statements, such as a “boxed” warning or a contraindication; • we may be required to create a Risk Evaluation and Mitigation Strategy, or REMS, plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers, and/or other elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools; • we may decide to remove such products from the marketplace; • we could be sued and held liable for harm caused to patients; and • our reputation may suffer. Any of the foregoing could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations, and prospects. If the FDA does not conclude that LAM-001 satisfies the requirements for the Section 505(b)(2) regulatory approval pathway, or if the requirements under Section 505(b)(2) are not as we expect, the approval pathway for LAM-001 will likely take significantly longer, cost significantly more and entail significantly greater complications and risks than anticipated and may not be successful. We intend to seek FDA approval of LAM-001 through the Section 505(b)(2) regulatory approval pathway. The Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments, added Section 505(b)(2) to the FDCA. Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference. Section 505(b)(2) allows an NDA we submit to FDA to rely in part on data in the public domain or the FDA's prior conclusions regarding the safety and effectiveness of approved compounds, which could expedite the development program for LAM-001 by potentially decreasing the 62 Table of Contents amount of clinical data that we would need to generate in order to obtain FDA approval. Specifically, we intend to rely on the FDA's prior conclusions regarding the safety and effectiveness of sirolimus (rapamycin), as reflected in the FDA's prior approvals of Rapamune for kidney transplant rejection prevention and lymphangioleiomyomatosis, as well as on published scientific literature regarding the use of rapamycin in pulmonary disease. An applicant seeking approval under the 505(b)(2) pathway must nonetheless submit sufficient data to support approval of its product, including data needed to establish a scientific bridge between the applicant's product and the data or findings on which it seeks to rely, and the type and amount of additional data required depend on the nature of the proposed product and the differences between that product and the reference product or underlying data. There can be no assurance that the FDA will agree that an adequate scientific bridge has been established between LAM-001 and the approved oral formulations of rapamycin on which we intend to rely. LAM-001 is a novel inhaled dry powder formulation of rapamycin specifically designed to achieve high localized lung concentrations while minimizing systemic exposure, which has a pharmacokinetic profile that differs materially from that of approved oral rapamycin, which achieves therapeutic effect through systemic blood concentrations. The FDA's prior conclusions regarding the safety and effectiveness of rapamycin were made in the context of its systemic administration, and the FDA may determine that those conclusions cannot be meaningfully extended to an inhaled formulation with a distinct pharmacokinetic profile without additional clinical data. The indications we are seeking also differ from the indications for which oral rapamycin is currently approved, which may further limit our ability to rely on the FDA's prior findings and require us to generate more original clinical data than the 505(b)(2) pathway would otherwise necessitate. If the FDA does not allow us to pursue the Section 505(b)(2) regulatory pathway as anticipated, or requires us to generate data beyond what we currently plan to generate in order to establish an adequate scientific bridge, we may need to conduct additional clinical trials, provide additional data and information and meet additional standards for regulatory approval. If this were to occur, the time and financial resources required to obtain FDA approval would likely substantially increase. Moreover, inability to pursue the Section 505(b)(2) regulatory pathway could result in new competitive products reaching the market more quickly than LAM-001, which would likely materially adversely impact our competitive position and prospects. In addition, notwithstanding the approval of a number of products by the FDA under Section 505(b)(2), certain brand-name pharmaceutical companies and others have objected to the FDA's interpretation of Section 505(b)(2). If the FDA's interpretation of Section 505(b)(2) is successfully challenged, the FDA may change its 505(b)(2) policies and practices, which could delay or even prevent the FDA from approving any NDA that we submit under Section 505(b)(2). In addition, the pharmaceutical industry is highly competitive, and Section 505(b)(2) NDAs are subject to special requirements designed to protect the patent rights of sponsors of previously approved drugs that are referenced in a Section 505(b)(2) NDA. These requirements may give rise to patent litigation and mandatory delays in approval of our NDA for up to 30 months or longer depending on the outcome of any litigation. It is not uncommon for a manufacturer of an approved product to file a citizen petition with the FDA seeking to delay approval of, or impose additional approval requirements for, pending competing products. If successful, such petitions can significantly delay, or even prevent, the approval of the new product. However, even if the FDA ultimately denies such a petition, the FDA may substantially delay approval while it considers and responds to the petition. We are targeting serious pulmonary disorders, which presents additional risks with respect to clinical development, regulatory approvals and commercialization of product candidates. Our approach of targeting serious pulmonary disorders such as PH-ILD, BOS and SAPH presents risks related to the clinical development, regulatory approval and commercialization of our product candidates, including the following: • we may have difficulty establishing safety and efficacy in these types of patient populations given the severe and rapidly progressing nature of the diseases we are targeting; • with respect to BOS and SAPH, the underlying etiologies of the diseases are incompletely understood, which may impact our ability to design adequate and well controlled trials; • we expect to face challenges with respect to patient enrollment in our clinical trials, as described above; 63 Table of Contents • small sample sizes in our clinical trials suggest that we face the risk of substantial variability in the results of our trials, and so the outcome of nonclinical testing and early clinical trials is less likely to be predictive of the success of later-stage clinical trials; • following approval of our product candidates, if any, pricing and level of reimbursement may not be sufficient to offset costs of development, manufacturing, marketing, and commercialization; • we may have difficulty selecting, validating, and/or achieving clinically meaningful endpoints that are acceptable to regulatory authorities; • we may have difficulty in accurately diagnosing, stratifying or confirming patients with PH-ILD, BOS or SAPH which could adversely affect enrollment, clinical trial design and interpretation of results; • regulatory authorities may require larger, longer, additional or different clinical trials than we anticipate, including studies in specific subpopulations or trials designed to address particular safety, efficacy or dosing questions; and • market size is a significant variable in the disease indications we are targeting. Our projections of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with product candidates we may develop, are based on estimates. These estimates have been derived from a variety of sources, including scientific literature, patient advocacy groups or market research. These estimates may prove to be incorrect and new studies may change the estimated incidence or prevalence of these diseases. The number of patients in the United States, Europe and elsewhere may turn out to be lower than expected, and patients may be more difficult to identify and access than our estimates contemplate. Adverse developments with respect to any of the foregoing could result in significant changes in our business plan and have a material adverse effect on our business, financial condition, results of operations, and prospects. Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent us or any future collaboration partners from obtaining approvals for the commercialization of any other product candidate we develop. Any product candidate we may develop and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, and distribution, are subject to comprehensive regulation by the FDA and other regulatory authorities in the United States and by comparable authorities in other countries. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate in a given jurisdiction. We have not received approval to market any product candidates from regulatory authorities in any jurisdiction and it is possible that none of the product candidates we may seek to develop in the future will ever obtain regulatory approval. We have no experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party contract research organizations, or CROs, or regulatory consultants to assist us in this process. Securing regulatory approval requires the submission of extensive preclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Any product candidates we develop may not be effective, may be only moderately effective, or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use. The process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity, and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and 64 Table of Contents clinical testing could delay, limit, or prevent marketing approval of a product candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable. If we experience delays in obtaining approval or if we fail to obtain approval of any product candidates we may develop, the commercial prospects for those product candidates may be harmed, and our ability to generate revenues may be materially impaired. Medical devices necessary for the administration of LAM-001 are subject to regulatory requirements that we must satisfy as part of our NDA and any post-approval obligations. LAM-001 is administered using a dry powder inhaler, which is manufactured by a third party. LAM-001, if approved, will be regulated by the FDA as a combination product, and our NDA must include data sufficient to demonstrate that the LAM-001 drug-device combination performs safely and as intended for use by our target patient populations. While the inhaler is an established device currently used to deliver multiple approved inhaled therapeutics, we must independently validate the specific drug-device combination as part of our NDA submission. Regulatory authorities may require user-factor studies as a part of our NDA submission. The FDA will require human factors and usability testing to demonstrate that patients with PH-ILD, BOS and SAPH can safely and effectively use the inhaler to administer LAM-001. If human factors testing reveals usability deficiencies, we may be required to modify the device, develop additional labeling or training tools, or conduct additional studies before the FDA will approve our NDA, any of which could delay our development timeline and increase our costs. In addition, following any approval of LAM-001, changes to the device, whether initiated by us, the manufacturer or required by a regulatory authority, may require us to make supplemental NDA filings and to conduct additional validation studies before the modified drug-device combination may be used. Any failure to obtain timely regulatory clearance for such changes, or any quality, safety, or performance issue identified with respect to the inhaler following approval, could limit our ability to supply LAM-001 to patients and could have a material adverse effect on our business, financial condition, results of operations and prospects. We have received orphan drug designation in the United States for LAM-001 in BOS, sarcoidosis, pulmonary arterial hypertension and lymphangioleiomyomatosis and in the European Union for LAM-001 in BOS and lymphangioleiomyomatosis, and we may seek orphan drug designation in other indications or for other product candidates in the future. We may be unsuccessful, or may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity, for product candidates for which we obtain orphan drug designation. Regulatory authorities in some jurisdictions, including the United States, may designate drugs or biologics intended to treat relatively small patient populations as orphan drug products. Under the Orphan Drug Act, the FDA may designate a drug or biologic as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States, or a patient population of 200,000 or more in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. In the United States, orphan drug designation entitled a party to financial incentives such as tax advantages and user fee waivers. Opportunities for grant funding toward clinical trial costs may also be available for clinical trials of drugs or biologics for rare diseases, regardless of whether the drugs or biologics are designated for the orphan use. In addition, if a drug or biologic with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a seven year period of marketing exclusivity, which precludes the FDA from approving another marketing application for the same drug and indication for that time period, except in limited circumstances. If our competitors are able to obtain orphan drug exclusivity prior to us, for products that constitute the “same drug” and treat the same indications as our product candidates, we may not be able to have competing products approved by the applicable regulatory authority for a significant period of time. In the European Union, a medicinal product can be designated as an orphan medicinal product by the European Commission if its sponsor can establish that: (i) the product is intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating conditions; (ii) either (a) such conditions affect not more than 5 in 10,000 persons in the European Union when the 65 Table of Contents application is made, or (b) the product without the benefits derived from orphan status, would not generate sufficient return in the European Union to justify the necessary investment in developing the medicinal product; and (iii) there exists no satisfactory authorized method of diagnosis, prevention, or treatment of the condition that has been authorized in the European Union, or even if such method exists, the product will be of significant benefit to those affected by that condition. Orphan medicinal product designation entitles an applicant to incentives such as fee reductions or fee waivers, protocol assistance, and access to the centralized marketing authorization procedure. Upon grant of a marketing authorization, orphan medicinal products are entitled to a ten-year period of market exclusivity for the approved therapeutic indication, which means that the EMA cannot accept another marketing authorization application or accept an application to extend for a similar product and the European Commission cannot grant a marketing authorization for the same indication for a period of ten years. The period of market exclusivity is extended by two years for orphan medicinal products that have also complied with an agreed PIP. The period of market exclusivity may, however, be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria on the basis of which it received orphan medicinal product designation, including where it can be demonstrated on the basis of available evidence that the original orphan medicinal product is sufficiently profitable not to justify maintenance of market exclusivity or where the prevalence of the condition has increased above the threshold. Additionally, an MA may be granted to a similar medicinal product with the same orphan indication during the 10 year period if: (i) if the applicant consents to a second original orphan medicinal product application, (ii) if the manufacturer of the original orphan medicinal product is unable to supply sufficient quantities; or (iii) if the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior to the original orphan medicinal product. A company may voluntarily remove a product from the register of orphan products. Orphan medicinal product designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. We have obtained orphan drug designation in the United States for LAM-001 for the treatment of BOS, sarcoidosis, pulmonary arterial hypertension and lymphangioleiomyomatosis. In addition, we have received orphan drug designation in the European Union for LAM-001 the treatment of BOS and lymphangioleiomyomatosis. We may seek orphan designation for certain of our other current and future product candidates. However, we may be unsuccessful in obtaining orphan drug designation for these or other product candidates and may be unable to maintain the benefits associated with orphan drug designation. Even if we obtain orphan drug exclusivity for any of our product candidates, that exclusivity may not effectively protect those product candidates from competition because different drugs can be approved for the same condition, and orphan drug exclusivity does not prevent the FDA or comparable foreign regulatory authorities from approving the same or a different drug in another indication. Even after an orphan drug is granted orphan exclusivity and approved, the FDA can subsequently approve a later application for the same drug for the same condition before the expiration of the seven-year exclusivity period if the FDA concludes that the later drug is clinically superior in that it is shown to be safer in a substantial portion of the target populations, more effective or makes a major contribution to patient care. In addition, a designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. Moreover, orphan-drug-exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if we are unable to manufacture sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. Risks Related to Development and our Dependence on Third Parties We currently rely, and expect to continue to rely, on third parties to conduct, supervise, and monitor our preclinical studies and clinical trials. If those third parties do not perform satisfactorily, including failing to meet deadlines for the completion of such clinical trials or failing to comply with regulatory requirements, we may be unable to obtain regulatory approval for our product candidates. We currently rely on third-party CROs, academic institutions, study sites, clinical investigators and others to conduct, supervise, and monitor our preclinical studies and clinical trials. We expect to continue to rely on third parties, such as CROs, clinical data management organizations, medical institutions, and clinical investigators, to conduct our preclinical studies and clinical trials. Although we currently have or plan to enter into agreements governing the activities of these third parties, we have limited influence over their 66 Table of Contents actual performance and control only certain aspects of their activities. The failure of these third parties to successfully carry out their contractual duties or meet expected deadlines could substantially harm our business because we may be delayed in completing or unable to complete the studies required to develop LAM-001 and other current and future product candidates, or we may not obtain marketing approval for, or commercialize, LAM-001 or our other current and future product candidates in a timely manner or at all. Moreover, these agreements might terminate for a variety of reasons, including a failure to perform by the third parties. If we need to enter into alternative arrangements our product development activities could be delayed and our business, financial condition, results of operations, stock price and prospects may be materially harmed. Our reliance on these third parties for development activities reduces our control over these activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on third parties does not relieve us of our regulatory responsibilities. For example, we will remain responsible for ensuring that each of our trials is conducted in accordance with the general investigational plan and protocols for the trial. We must also ensure that our preclinical studies are conducted in accordance with the FDA’s Good Laboratory Practice, or GLP, regulations, as appropriate. Moreover, the FDA and comparable foreign regulatory authorities require us to comply with GCPs for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity, and confidentiality of trial participants are protected. Regulatory authorities enforce these requirements through periodic inspections of trial sponsors, clinical investigators, and trial sites. If we or any of our third parties fail to comply with applicable GCPs or other regulatory requirements, we or they may be subject to enforcement or other legal actions, the data generated in our trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional studies. In addition, we will be required to report certain financial interests of our third-party investigators if these relationships exceed certain financial thresholds or meet other criteria. The FDA or comparable foreign regulatory authorities may question the integrity of the data from those clinical trials conducted by investigators who may have conflicts of interest. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with the applicable regulatory requirements. In addition, our clinical trials must be conducted with product candidates that were produced under cGMP regulations. Failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process. We also are required to register certain clinical trials and post the results of certain completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within specified timeframes. Failure to do so can result in enforcement actions and adverse publicity. The third parties with which we work may also have relationships with other entities, some of which may be our competitors, for whom they may also be conducting trials or other therapeutic development activities that could harm our competitive position. In addition, such third parties are not our employees, and except for remedies available to us under our agreements with such third parties we cannot control whether or not they devote sufficient time and resources to the development of our product candidates. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our preclinical studies or clinical trials in accordance with regulatory requirements or our stated protocols, if these parties are adversely impacted by a pandemic limiting or materially affecting their ability to carry out their contractual duties, if they need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our protocols, regulatory requirements or for other reasons, our trials may be repeated, extended, delayed, or terminated; we may not be able to obtain, or may be delayed in obtaining, marketing approvals for current and future product candidates; we may not be able to, or may be delayed in our efforts to, successfully commercialize current and future product candidates; or we or they may be subject to regulatory enforcement actions. As a result, our results of operations and the commercial prospects for current and future product candidates may be harmed, our costs could increase and our ability to generate revenues could be delayed. To the extent we are unable to successfully identify and manage the performance of third-party service providers in the future, our business, financial condition, results of operations, stock price and prospects may be materially harmed. We may enter into collaborations for our current or future product candidates or technologies. We cannot control the timing or quantity of resources that our existing or future collaborators will dedicate to research, preclinical and clinical development. Our 67 Table of Contents collaborators may not perform their obligations according to our expectations or standards of quality. Our collaborators could terminate our existing agreements for a number of reasons, many of which may be beyond our control. We will also rely on other third parties to store and distribute our product candidates for the clinical trials that we plan to conduct. Any performance failure on the part of our distributors could delay clinical development, marketing approval, or commercialization of current and future product candidates, which could result in additional losses and deprive us of potential product revenue. If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative providers or to do so on commercially reasonable terms. Switching or adding additional third parties involves additional cost and requires management’s time and focus. In addition, there is a natural transition period when a new third party commences work. As a result, delays could occur, which could compromise our ability to meet our desired development timelines. We currently rely on CMOs for the production of LAM-001, including for the supply of rapamycin, and we expect to rely on CMOs for our other product candidates. This reliance on CMOs increases the risk that we will not have sufficient quantities of such materials, product candidates, or any therapies that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts. Because LAM-001 is an inhaled dry powder formulation of rapamycin, any disruption to the supply of rapamycin could halt our entire development program. The need to maintain a supply chain for rapamycin increases our operational complexity and our vulnerability to supply disruptions. We may not be able to secure a backup supplier on commercially reasonable terms. Any significant delay in the supply of rapamycin could considerably delay our clinical development, increase our costs, and have a material adverse effect on our business. We currently have no plans to build our own clinical or commercial-scale manufacturing capabilities for our product candidates. Instead, we expect to rely on third parties for the manufacture of our product candidates and related raw materials for future preclinical and clinical development, as well as for commercial manufacture if any of our product candidates receive marketing approval. We have entered into arrangements with a limited number of third-party contract manufacturing organizations, or CMOs, as part of our development of our product candidates. These CMOs will provide drug substance intermediate, device, and drug product that will be subsequently, tested, released, labeled, packaged and distributed to our CROs. We may also enter into agreements with additional companies for the supply of substances for use in the development of our product candidates or any future product candidates or for the manufacture of such product candidates. We or our third-party suppliers or manufacturers may encounter shortages in the raw materials or active pharmaceutical ingredient, or API, necessary to produce product candidates in the quantities needed for our clinical trials or, if any current or future product candidates we may develop are approved, in sufficient quantities for commercialization or to meet an increase in demand, as a result of capacity constraints or delays or disruptions in the market for the raw materials or API, including shortages caused by the purchase of such raw materials or API by our competitors or others. Even if raw materials or API are available, we may be unable to obtain sufficient quantities at an acceptable cost or quality. The failure by us or our third-party suppliers or manufacturers to obtain the raw materials or API necessary to manufacture sufficient quantities of any current or future product candidates we may develop could delay, prevent or impair our development efforts and may have a material adverse effect on our business. The facilities used by third-party manufacturers to manufacture current or future product candidates must be authorized by the FDA pursuant to inspections that will be conducted after we submit a NDA to the FDA. We do not control the manufacturing process of, and are completely dependent on, third-party manufacturers for compliance with cGMP requirements for manufacture of drug products and other laws and regulations. If these third-party manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or others, they will not be able to secure and maintain regulatory approval for their manufacturing facilities. In addition, we have no control over the ability of third-party manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need 68 Table of Contents to find alternative manufacturing facilities, which could significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved. Finding new CMOs or third-party suppliers involves additional cost and requires our management’s time and focus. In addition, there is typically a transition period when a new CMO commences work. Although we do not intend to begin a clinical trial unless we believe we have on hand, or will be able to obtain, a sufficient supply of our product candidates to complete the clinical trial, any significant delay in the supply of our product candidates or the raw materials needed to produce our product candidates, could considerably delay conducting our clinical trials and potential regulatory approval of any of our product candidates. Additionally, any changes implemented by a new CMO would require substantial investment to qualify and validate the vendor as a suitable third party manufacturer of our development or marketed products. Furthermore, we may be required to conduct comparability assessments, which may include additional human clinical studies, in conjunction with validating the new CMO(s). If any CMO with whom we contract fails to perform its obligations, it could delay completion of clinical trials, require the conduct of bridging clinical trials or studies, require the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our current and future product candidates and jeopardize our ability to commence product sales and generate revenue. If any CMO with whom we contract fails to perform its obligations, we may be forced to manufacture the materials ourselves, for which we may not have the capabilities or resources, or enter into an agreement with a different CMO, which we may not be able to do on reasonable terms, if at all. In either scenario, our clinical trials or commercial supply could be delayed significantly as we establish alternative supply sources. In some cases, the technical skills required to manufacture our products or product candidates may be unique or proprietary to the original CMO and we may have difficulty, or there may be contractual restrictions prohibiting us from, transferring such skills to a back-up or alternate supplier, or we may be unable to transfer such skills at all. In addition, if we are required to change CMOs for any reason, we will be required to verify that the new CMO maintains facilities and procedures that comply with quality standards and with all applicable regulations. We will also need to verify, such as through a manufacturing comparability study, that any new manufacturing process will produce our product candidate according to the specifications previously submitted to or approved by the FDA or another regulatory authority. The delays associated with the verification of a new CMO could negatively affect our ability to develop product candidates or commercialize our products in a timely manner or within budget. Furthermore, a CMO may possess technology related to the manufacture of our product candidates that such CMO owns independently. This would increase our reliance on such CMO or require us to obtain a license from such CMO in order to have another CMO manufacture our product candidates or products. In addition, in the case of CMOs that supply our product candidates, changes in manufacturers often involve changes in manufacturing procedures and processes, which could require that we conduct bridging studies between our prior clinical supply used in our clinical trials and that of any new manufacturer. We may be unsuccessful in demonstrating the comparability of clinical supplies which could require the conduct of additional clinical trials. As part of their manufacture of our product candidates, our CMO and third-party suppliers are expected to comply with and respect the intellectual property and proprietary rights of others. If our CMO or third-party supplier fails to acquire the proper licenses or otherwise infringes, misappropriates or otherwise violates the intellectual property or proprietary rights of others in the course of providing services to us, we may have to find alternative CMOs or third-party suppliers or defend against applicable claims, either of which could significantly impact our ability to develop, obtain regulatory approval for or commercialize our product candidates, if approved. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products. In addition, we may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: 69 Table of Contents • failure of third-party manufacturers to comply with regulatory requirements and maintain quality assurance; • breach of the manufacturing agreement by the third party; • failure to manufacture our product according to our specifications; • failure to manufacture our product according to our schedule or at all; • production difficulties caused by unforeseen events that may delay the availability of one or more of the necessary raw materials or delay the manufacture of any current or future product candidates for use in clinical trials or for commercial supply; • misappropriation of our proprietary information, including our trade secrets and know-how; and • termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us. Any product candidates that we may develop may compete with other product candidates and products for access to manufacturing facilities. Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval, and any related remedial measures may be costly or time-consuming to implement. We do not currently have arrangements in place for redundant supply or second sources of supply with alternative suppliers or CMOs to supplement or supply the raw materials, drug substances, intermediates, and drug product necessary for the manufacture of our product candidates, including LAM-001. If our current third-party CMO cannot perform as agreed, we may be required to replace such manufacturer and we may be unable to replace them on a timely basis or at all. We rely on a single supplier for the dry powder inhaler, and a limited number of suppliers for the raw materials used in our product candidates, and accordingly, any delay, shortage or interruption in the supply of the inhaler or such raw materials, or any contamination in our manufacturing process, could lead to delays in the manufacture and supply of our product candidates. LAM-001 is administered using a dry powder inhaler. We have entered into a supply agreement with Plastiape S.p.A. that provides us with exclusive rights with respect to the device and rapamycin for LAM-001. We currently rely on Plastiape as our sole supplier for the inhaler. If Plastiape were unable or unwilling to supply the inhaler in accordance with our supply agreement, we would need to identify and qualify an alternative device, which would require significant time, expense and regulatory effort, including potential modifications to our NDA submission and additional validation studies. Any failure by Plastiape to perform its obligations under the supply agreement, or any termination or non-renewal of such agreement, could adversely impact our ability to manufacture and supply LAM-001 for our clinical trials or, if approved, for commercial use, and could have a material adverse effect on our business, financial condition, results of operations and prospects. We do not manufacture or control the inhaler, and any disruption to Plastiape’s ability to manufacture or support the device could temporarily affect our ability to supply LAM-001 for our clinical trials or, if approved, for commercial use. We further rely on third-parties to supply certain raw materials necessary to produce our product candidates for preclinical studies and clinical trials. For example, we rely on third-parties to supply certain reagents, which are substances used in our manufacturing processes to bring about chemical or biological reactions, and other specialty materials and equipment, some of which are manufactured or supplied by small companies with limited resources. There are a small number of suppliers for certain raw materials that we use to manufacture our product candidates. Certain of our suppliers or their sub-suppliers are international, which exposes us to additional risks including trade restrictions, tariffs, export controls, geopolitical tensions, and potential disruptions to the supply chain that are beyond our control. We work with our CMOs to purchase these materials from our suppliers who may not always have long-term supply agreements in place, which could expose us to a variety of risks, including a potential inability to obtain critical materials and reduced control over production costs, delivery schedules, reliability and quality. Any unanticipated disruption to our contract manufacturing caused by problems at suppliers could delay shipment of our product candidates, increase our cost of goods sold and result in lost sales with respect to any approved products. Any significant delay in the supply of raw materials for our product candidates for a preclinical study or a clinical trial due to the need to replace a third-party supplier could considerably delay completion of certain preclinical studies and/or clinical trials. Moreover, if we are unable to purchase sufficient raw materials after regulatory approval for our product candidates, the commercial launch of our product candidates could be delayed, or there could be a supply shortage, each of which could impair our ability to generate revenues from their sale. 70 Table of Contents In addition, a material shortage, contamination, recall or restriction on the use of substances in the manufacture of our drug candidates, or the failure of any of our key suppliers to deliver necessary components required for the manufacture of our product candidates could adversely impact or disrupt the commercial manufacture or the production of clinical material, which could materially and adversely affect our development timelines and our business, financial condition, results of operations, and future prospects. Our employees, principal investigators, CROs and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements. We are exposed to the risk that our employees, principal investigators, CROs and consultants may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate the regulations of the FDA and other regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities; healthcare fraud and abuse laws and regulations in the United States and abroad; or laws that require the reporting of financial information or data accurately. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws also involve the improper use of information obtained in the course of clinical trials or creating fraudulent data in our preclinical studies or clinical trials, which could result in regulatory sanctions and cause serious harm to our reputation. We have a code of conduct applicable to all of our employees, but it is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. Additionally, we are subject to the risk that a person could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations. Risks Related to Regulatory Approval of our Product Candidates and Other Legal Compliance Matters If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for our product candidates, we will not be able to commercialize or will be delayed in commercializing our product candidates, and our ability to generate revenue will be materially impaired. Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, distribution, import and export are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable authorities in other countries. Before we can commercialize any of our product candidates, we must obtain marketing approval. Currently, all of our product candidates are in development, and we have not received approval to market any of our product candidates, including LAM-001 for the treatment of PH-ILD, BOS and SAPH, from regulatory authorities in any jurisdiction. It is possible that our product candidates, including any product candidates we may seek to develop in the future, will never obtain regulatory approval. Whether the results from our clinical trials will suffice to obtain approval will be a review issue and the FDA may not grant approval and may require that we conduct one or more additional controlled clinical trials to obtain approval. Additionally, even if the FDA does grant approval for one or more of our product candidates, it may be for a narrower indication than we seek. Regulatory authorities, including the FDA, also may impose significant limitations in the form of narrow indications, warnings or a REMS. These regulatory authorities may require labeling that includes precautions or contra-indications with respect to conditions of use, or they may grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of any product candidates we may develop. 71 Table of Contents We have only limited experience in filing and supporting the applications necessary to gain regulatory approvals and expect to rely on third-party CROs and/or regulatory consultants to assist us in this process. Securing regulatory approval requires the submission of extensive preclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use. In addition, regulatory authorities may find fault with our manufacturing process or facilities or that of third-party contract manufacturers. We may also face greater than expected difficulty in manufacturing our product candidates. The process of obtaining regulatory approvals, both in the United States and abroad, is expensive and often takes many years. If the FDA or a comparable foreign regulatory authority requires that we perform additional preclinical studies or clinical trials, approval, if obtained at all, may be delayed. The length of such a delay varies substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted NDA, premarket approval application, or equivalent application types, may cause delays in the approval or rejection of an application. The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. Our product candidates could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including the following: • the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our preclinical studies or clinical trials; • we may not be able to enroll a sufficient number of patients in our clinical studies; • we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; • the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; • we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; • the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere; • the FDA or comparable foreign regulatory authorities may find deficiencies with or fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and • the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change such that our clinical data are insufficient for approval. Even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, thereby narrowing the commercial potential of the product candidate. In addition, regulatory authorities may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates. If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be materially impaired. 72 Table of Contents Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions. We may submit marketing applications in countries other than the United States. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of product candidates with which we must comply prior to marketing in those jurisdictions. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed. Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if the FDA grants marketing approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional nonclinical studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In short, the foreign regulatory approval process involves all of the risks associated with FDA approval. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we may intend to charge for our products will also be subject to approval. Even if we receive regulatory approval for any of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense. Additionally, our product candidates, if approved, could be subject to post-market study requirements, marketing and labeling restrictions, and even recall or market withdrawal if unanticipated safety issues are discovered following approval. In addition, we may be subject to penalties or other enforcement action if we fail to comply with regulatory requirements. If the FDA or a comparable foreign regulatory authority approves any of our product candidates, the manufacturing processes, labeling, packaging, distribution, storage, advertising, promotion, import, export, recordkeeping, monitoring, and reporting for our product will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, establishment registration and listing, as well as continued compliance with cGMPs and GCPs for any clinical trials that we conduct post-approval. Any regulatory approvals that we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing studies, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product. The FDA may require a REMS in order to approve our product candidates, which could entail requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: • restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls; • revision to the labeling, including limitations on approved uses or the addition of additional warnings, contraindications or other safety information, including boxed warnings; • imposition of a REMS, which may include distribution or use restrictions; • requirements to conduct additional post-market clinical trials to assess the safety of the product; • fines, warning letters or other regulatory enforcement action; 73 Table of Contents • refusal by the FDA to approve pending applications or supplements to approved applications filed by us; • product seizure or detention, or refusal to permit the import or export of products; and • injunctions or the imposition of civil or criminal penalties. The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which could adversely affect our business, prospects and ability to achieve or sustain profitability. Our relationships with customers, healthcare professionals, and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to significant penalties, including criminal sanctions, administrative civil penalties, exclusion from government healthcare programs, contractual damages, reputational harm and diminished profits and future earnings. Our current and future business operations and activities may subject us to additional healthcare statutory and regulatory requirements and enforcement by the federal government and the states and foreign governments in which we conduct our business. Healthcare providers and third-party payors play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our current and future arrangements with healthcare professionals, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research as well as market, sell and distribute our product candidates for which we obtain marketing approval. These laws and regulations may restrict or prohibit a wide range of ownership, pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally. Restrictions under applicable federal and state healthcare laws and regulations, include the following: • the federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers, on the one hand, and prescribers, purchasers and formulary managers, on the other. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • the federal civil and criminal false claims, including the federal FCA, which can be enforced through civil whistleblower or qui tam actions, and civil monetary penalties laws, which impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA; • HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • the federal physician payment transparency requirements, sometimes referred to as the “Sunshine Act” under the Affordable Care Act, or ACA, require certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report to the Centers for Medicare & Medicaid Services, or CMS, information related to transfers of value made to physicians (currently defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as nurse practitioners and physicians assistants), and teaching hospitals, as well as information regarding ownership and investment interests of such physicians and their immediate family members; 74 Table of Contents • HIPAA, as amended by HITECH and its implementing regulations, impose obligations on certain covered entity healthcare providers, health plans, and healthcare clearinghouses and their business associates that perform certain services involving the use or disclosure of individually identifiable health information as well as their covered subcontractors, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; and • analogous state laws and regulations, such as state anti-kickback and false claims laws may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers. Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures. Some state and local laws require certain regulatory licenses to manufacture or distribute our products commercially and/or the registration of pharmaceutical sales representatives. Further, many state laws governing the privacy and security of health information in certain circumstances, differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available, it is possible that some of our business activities, including compensation of physicians with stock or equity awards, could, despite efforts to comply, be subject to challenge under current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. Ensuring that our business arrangements with third parties comply with applicable healthcare laws and regulations could involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations were to be found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, contractual damages, integrity oversight and reporting obligations, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. If any of the physicians or other providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. In addition, the approval and commercialization of any of our product candidates outside the United States will also likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign laws. Healthcare legislative reform measures may have a material adverse effect on our business and results of operations. The U.S. and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that could prevent or delay marketing approval of our current or future product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell a product for which we obtain marketing approval. Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example: (i) changes to our manufacturing arrangements, (ii) additions or modifications to product labeling, (iii) the recall or discontinuation of our products or (iv) additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of our business. In the U.S., there have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in March 2010, the Patient Protection and ACA was passed, which substantially changed the way healthcare is financed by both governmental and private insurers. There have been executive, judicial and congressional challenges to certain aspects of the ACA. For example, on July 4, 2025, the One Big Beautiful Bill Act, or the OBBBA, was signed into law, which narrowed access to ACA marketplace exchange enrollment and declined to extend the ACA enhanced advanced premium tax credits that expired at the end of 2025, which, among other provisions in the law, are anticipated to reduce the number of Americans with health insurance. The OBBBA also is expected to reduce Medicaid spending and enrollment by implementing work requirements for some beneficiaries, capping state-directed payments, reducing federal funding, and limiting provider taxes used to fund the program. Congress is considering proposed legislation intended to further reduce healthcare costs with alternatives to replace the expired ACA subsidies. 75 Table of Contents In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes include aggregate reductions to Medicare payments to providers of 2% per fiscal year, which began in 2013 and will remain in effect until 2032 unless additional Congressional action is taken. The current administration is pursuing policies to reduce regulations and expenditures across government agencies including at the U.S. Department of Health and Human Services, or HHS, the FDA, CMS and related agencies. These actions, presently directed by executive orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional uncertainty for our business. For example, the current administration has announced agreements with certain pharmaceutical companies that require the drug manufacturers to offer, through a direct to consumer platform (TrumpRx), U.S. patients and Medicaid programs prescription drug Most-Favored Nation pricing equal to or lower than those paid in other developed nations, with additional mandates for direct-to-patient discounts and repatriation of foreign revenues. Other recent actions, for example, include (1) directing agencies to reduce agency workforce and cut programs; (2) directing HHS and other agencies to lower prescription drug costs through a variety of initiatives; (3) imposing tariffs on imported pharmaceutical products; and (4) as part of the Make America Healthy Again Commission’s Strategy Report released in September 2025, working across government agencies to increase enforcement on direct-to-consumer pharmaceutical advertising. Additionally, the current administration recently called on Congress to enact “The Great Healthcare Plan,” to codify and expand Most-Favored Nation pricing, lower government subsidies to private insurance companies, increase healthcare price transparency, expand pharmaceutical drugs available for over-the-counter purchase, and enact restrictions on pharmacy benefit manager payment methodologies, among other things. These actions and policies may significantly reduce U.S. drug prices, potentially impacting manufacturers’ global pricing strategies and profitability, while increasing their operational costs and compliance risks. In June 2024, the U.S. Supreme Court’s Loper Bright decision greatly reduced judicial deference to regulatory agencies, which could increase successful legal challenges to federal regulations affecting our operations. Congress may introduce and ultimately pass health care related legislation that could impact the drug approval process and make changes to the Medicare Drug Price Negotiation Program. At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. For example, on June 15, 2026, the FDA approved Colorado’s Section 804 Importation Program (“SIP”) proposal to import certain drugs from Canada for specific state healthcare programs. It is unclear how this and Florida’s similar program, approved by the FDA in 2024, will be implemented and whether they will overcome potential legal, regulatory, or industry challenges in the United States and/or Canada. In addition, regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing. Our revenue prospects could be affected by changes in healthcare spending and policy in the U.S. and abroad. We operate in a highly regulated industry and new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions, related to healthcare availability, the method of delivery or payment for healthcare products and services could negatively impact our business, operations and financial condition. There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. We cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect: • the demand for our current or future product candidates, if we obtain regulatory approval; • our ability to set a price that we believe is fair for our products; • our ability to obtain coverage and reimbursement approval for a product; • our ability to generate revenue and achieve or maintain profitability; • the level of taxes that we are required to pay; and 76 Table of Contents • the availability of capital. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect our future profitability. We are subject to the U.K. Bribery Act 2010, or the Bribery Act, the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, and other anti-corruption laws, as well as export control laws, import and customs laws, trade and economic sanctions laws and other laws governing our operations. Our operations are subject to anti-corruption laws, including the Bribery Act, the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. §201, the U.S. Travel Act, and other anti-corruption laws that apply in countries where we do business. The Bribery Act, the FCPA and these other laws generally prohibit us and our employees and intermediaries from authorizing, promising, offering, or providing, directly or indirectly, improper or prohibited payments, or anything else of value, to government officials or other persons to obtain or retain business or gain some other business advantage. Under the Bribery Act, we may also be liable for failing to prevent a person associated with us from committing a bribery offense. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls. We and our commercial partners operate in a number of jurisdictions that pose a high risk of potential Bribery Act or FCPA violations, and we participate in collaborations and relationships with third parties whose corrupt or illegal activities could potentially subject us to liability under the Bribery Act, FCPA or local anti-corruption laws, even if we do not explicitly authorize or have actual knowledge of such activities. In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted. We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of the United Kingdom and the United States, and authorities in the European Union, including applicable export control regulations, economic sanctions and embargoes on certain countries and persons, anti-money laundering laws, import and customs requirements and currency exchange regulations, collectively referred to as the Trade Control laws. Compliance with Trade Control laws may create delays in the introduction of our products in international markets or, in some cases, prevent the export of our products to some countries altogether. Furthermore, Trade Control laws prohibit the provision of certain products and services to countries, governments and persons targeted by sanctions. There is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the Bribery Act, the FCPA or other legal requirements, including Trade Control laws. If we are not in compliance with the Bribery Act, the FCPA and other anti-corruption laws or Trade Control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity. Likewise, any investigation of any potential violations of the Bribery Act, the FCPA, other anti-corruption laws or Trade Control laws by United Kingdom, United States or other authorities could also have an adverse impact on our reputation, our business, results of operations and financial condition. If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business. We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations may involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations may also produce hazardous waste products. We generally intend to contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. 77 Table of Contents In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions. Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions or liabilities, which could materially adversely affect our business, financial condition, results of operations and prospects. Risks Related to the Commercialization of our Product Candidates If we are unable to establish sales, marketing and distribution capabilities for our product candidates, or enter into sales, marketing and distribution agreements with third parties, we may not be successful in commercializing our product candidates, if approved. We have never commercialized a product. To achieve commercial success for any product for which we obtain marketing approval, we will need a sales and marketing organization and establish logistics and distribution processes to commercialize and deliver our product candidates to patients and healthcare providers. We currently plan to work to build our commercialization capabilities internally over time such that we are able to commercialize any product candidate for which we may obtain regulatory approval. However, we currently have no sales, marketing or distribution capabilities and have no experience in marketing or distributing pharmaceutical products. These activities will be expensive and time-consuming and will require significant attention of our executive officers to manage. There are risks involved in establishing our own sales and marketing capabilities, as well as with entering into arrangements with third parties to perform these services. Additionally, our beliefs that our products will be commercially viable have not been tested. If we are unable or decide not to establish internal sales, marketing and distribution capabilities, we would have to pursue collaborative arrangements regarding the sales and marketing of our products. However, we may not be successful in entering into arrangements with third parties to sell, market and distribute our product candidates or may be unable to do so on terms that are favorable to us, or if we are able to do so, that they would be effective and successful in commercializing our products. Our product revenues and our profitability, if any, would likely to be lower than if we were to sell, market and distribute any product candidates that we develop ourselves. In addition, we would have limited control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our product candidates, including LAM-001, effectively. If we do not establish sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates in the United States or overseas. We operate in a rapidly changing industry and face significant competition, which may result in others discovering, developing or commercializing products before or more successfully than we do. The development and commercialization of new biopharmaceutical products is highly competitive and subject to rapid and significant technological advancements. We face competition from major multi-national pharmaceutical companies, biotechnology companies and specialty pharmaceutical companies with respect to our current and future product candidates that we may develop and commercialize in the future. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of product candidates for the treatment of serious pulmonary disorders, including PH-ILD. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Potential competitors also include academic institutions, government agencies and other public and private research organizations. Tyvaso, sold by United Therapeutics, Inc., and Yutrepia, sold by Liquidia Corporation, are approved drugs for the treatment of PH-ILD. We believe that LAM-001 for the treatment of PH-ILD has the potential to be used in combination with approved therapies and 78 Table of Contents product candidates in development. We are aware of several product candidates in clinical development for the treatment of PH-ILD, including product candidates in development by AllRock Bio, Apollo Therapeutics, Foresee Pharmaceuticals, Gossamer Bio, Halo Biosciences, Insmed Incorporated, Liquidia Corporation, Pharmosa Biopharm, Pulmovant, Tectonic Therapeutic, and United Therapeutics Corporation. We also anticipate that we would compete with product candidates in development for BOS by Renovion, Sanofi, and Zambon. Several of these product candidates are in Phase 3 registrational trials with potential approval timelines that are ahead of our development timeline for LAM-001, including Insmed’s TPIP in a Phase 3 clinical trial for PH-ILD and Liquidia and Pharmosa’s L606 in a Phase 3 clinical trial for PH-ILD. In SAPH, we are aware of products marketed for the treatment of PAH which are frequently used off-label in SAPH patients, including drugs manufactured by Bayer, Eli Lilly, Gilead, Johnson & Johnson, Liquidia, Pfizer, and United Therapeutics. We believe that LAM-001 for the treatment of SAPH has the potential to be used in combination with these therapies. Our competitors with development-stage programs may obtain marketing approval from the FDA or other comparable regulatory authorities for their product candidates more rapidly than we do, and they could establish a strong market position before we are able to enter the market. In addition, our competitors may succeed in developing, acquiring or licensing technologies and products that are more effective, more effectively marketed and sold or less costly than any product candidates that we may develop, which could render our product candidates non-competitive and obsolete. The companies against which we may compete may have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ourselves, which could result in our competitors establishing a strong market position before we are able to enter the market. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products. Because of our primary focus on serious pulmonary disorders, if our product candidates achieve marketing approval, we expect to seek premium pricing. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive or better reimbursed than any products that we may commercialize. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position for either their product or a specific indication before we are able to enter the market. Even if any of our product candidates receives marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success. Even if we obtain approvals from the FDA or other comparable regulatory agencies and are able to initiate commercialization of our product candidates or any other product candidates we develop, the product candidate may not achieve market acceptance among physicians, patients, hospitals, including pharmacy directors, and third-party payors and, ultimately, may not be commercially successful. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including: 79 Table of Contents • the clinical indications for which our product candidates are approved; • physicians, hospitals, and patients considering our product candidates as a safe and effective treatment; • the potential and perceived advantages of our product candidates over alternative treatments; • the prevalence and severity of any side effects; • product labeling or product insert requirements of the FDA or other regulatory authorities; • limitations or warnings contained in the labeling approved by the FDA; • the timing of market introduction of our product candidates as well as competitive products; • the cost of treatment in relation to alternative treatments; • the amount of upfront costs or training required for physicians to administer our product candidates; • the availability of coverage, adequate reimbursement from, and our ability to negotiate pricing with, third-party payors and government authorities; • the willingness of patients to pay out-of-pocket in the absence of comprehensive coverage and reimbursement by third-party payors and government authorities; • relative convenience and ease of administration, including as compared to alternative treatments and competitive therapies; and • the effectiveness of our sales and marketing efforts and distribution support. Our efforts to educate physicians, patients, third-party payors and others in the medical community on the benefits of our product candidates, if approved, may require significant resources and may never be successful. Because we expect sales of our product candidates, if approved, to generate substantially all of our product revenue for the foreseeable future, the failure of our product candidates to find market acceptance could harm our business and could require us to seek additional financing. Even if our product candidates, if approved, achieve market acceptance, we may not be able to maintain that market acceptance over time if new products or technologies are introduced that are more favorably received than our products, are more cost effective or render our products obsolete. Coverage and adequate reimbursement may not be available for our current or any future product candidates, which could make it difficult for us to sell profitably, if approved. Market acceptance and sales of any product candidates, if approved, that we commercialize will depend in part on the extent to which reimbursement for these products and related treatments will be available from third-party payors, including government health administration authorities, managed care organizations and private health insurers. Third-party payors decide which therapies they will pay for and establish reimbursement levels. In the United States, the principal decisions about reimbursement for new medicines are typically made by CMS, an agency within HHS. CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree. However, decisions regarding the extent of coverage and amount of reimbursement to be provided for any product candidates that we develop will be made on a payor-by-payor basis. Further, no uniform policy for coverage and reimbursement exists in the United States, and coverage and reimbursement can differ significantly from payor to payor. As a result, one payor’s determination to provide coverage for a drug does not assure that other payors will also provide coverage and adequate reimbursement for the drug. Additionally, a third-party payor’s decision to provide coverage for a therapy does not imply that an adequate reimbursement rate to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment will be approved. Third-party payors are increasingly challenging the price, examining the medical necessity and reviewing the cost-effectiveness of medical products, therapies and services, in addition to questioning their safety and efficacy. We may incur significant costs to conduct expensive pharmaco-economic studies in order to demonstrate the medical necessity and cost-effectiveness of our product candidates, in addition to the costs required to obtain FDA approvals. Our product candidates may not be considered medically necessary or cost-effective. Each payor determines whether or not it will provide coverage for a therapy, what amount it will pay the manufacturer for the therapy, and on what tier of its list of covered drugs, or formulary, it will 80 Table of Contents be placed. The position on a payor’s formulary generally determines the co-payment that a patient will need to make to obtain the therapy and can strongly influence the adoption of such therapy by patients and physicians. Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products, and providers are unlikely to prescribe our products, unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products and their administration. Therefore, coverage and adequate reimbursement is critical to new medical product acceptance. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. We cannot be sure that coverage and reimbursement will be available for any drug that we commercialize and, if reimbursement is available, what the level of reimbursement will be. For example, HHS imposes rebates on many Medicare Part B and Medicare Part D products to penalize price increases that outpace inflation on an annual basis. HHS has also been empowered to negotiate the price of certain single-source drugs that have been on the market for at least seven (7) years and biologics that have been on the market for at least eleven (11) years covered under Medicare as part of the Medicare Drug Price Negotiation Program. Each year up to twenty (20) products will be selected by HHS for the Medicare Drug Price Negotiation Program. Products subject to the Medicare Drug Price Negotiation Program are expected to experience a significant reduction in reimbursement from the Medicare program on a per unit basis. Even if favorable coverage and reimbursement status is attained for one or more product candidates for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. Inadequate coverage and reimbursement may impact the demand for, or the price of, any drug for which we obtain marketing approval. If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize our current and any future product candidates that we develop. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. In general, the prices of medicines under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for medicines, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenues and profits. We cannot be sure that coverage and reimbursement in the United States or elsewhere will be available for any product that we may develop, and any reimbursement that may become available may be decreased or eliminated in the future. Moreover, our positioning of LAM-001 as an additional therapy may limit our pricing power and reimbursement potential, as third-party payors may view LAM-001 as an incremental addition to existing regimens and may impose step therapy, prior authorization or other access restrictions. Physicians may also be reluctant to add a new agent to complex treatment regimens in seriously ill patient populations where polypharmacy risks are heightened. Our business, operational and financial goals may not be attainable if the market opportunities for our products are smaller than we expect. Our internal research and third-party estimates may not accurately reflect the market opportunities for LAM-001 or our other product candidates today or in the future. The total market opportunities that we believe exist are based on a variety of assumptions, calculations and estimates, including the size of the addressable patient population in applicable jurisdictions, the penetration of other drugs in these markets, the number of patients we will test in clinical trials, the price we will be able to charge for our products and the total annual number of patients with PH-ILD, BOS or SAPH. In addition, we have relied on third-party publications, research, surveys and studies for information related to determining market opportunities, including without limitation, information on the number of respiratory disease patients and those receiving various forms of treatment, the cost of drug therapy, the amount of revenue generated from various types of drug therapy, the number of deaths caused by PH-ILD, BOS or SAPH, and the expected growth in related drug therapy and diagnostic markets. Our internal research and estimates on market opportunities include the use of independent sources, but any or all of our assumptions and/or estimates may prove to be incorrect for several reasons, such as inaccurate reports or information that we have relied on, potential patients or providers not being amenable to using our products or such patients becoming difficult to identify and access, limited reimbursement for our products, pricing pressure due to availability of alternative drugs or an inability to obtain the necessary regulatory 81 Table of Contents approvals for new indications. If any or all of our assumptions and estimates prove inaccurate, we may not attain our business, operational and financial goals. Inadequate funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business. The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for product candidates to be reviewed and/or approved by necessary government agencies, which could adversely affect our business. For example, over the last several years, the U.S. government has shut down several times, and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical employees and stop critical activities. If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations. Risks Related to Our Intellectual Property If we are unable to obtain and maintain effective patent protection for our technology and product candidates, or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets We rely upon a combination of patents, trade secret protection, trademarks, and confidentiality agreements to protect the intellectual property related to our product candidates and development programs. Our success depends in large part on our ability to obtain and maintain patents and other intellectual property protection in the United States and in other countries with respect to various proprietary elements of our product candidates, such as, for example, our product formulations and processes for manufacturing our products and our ability to maintain and control the confidentiality of our trade secrets and confidential information critical to our business. We have sought to protect our proprietary position by filing patent applications in the United States and abroad related to our products that are important to our business. The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. There is no guarantee that any patent application we file will result in an issued patent having claims that protect our products; and, as a result, we may not be able to effectively prevent others from commercializing competitive products. Additionally, while the basic requirements for patentability are similar across jurisdictions, each jurisdiction has its own specific requirements for patentability. We cannot guarantee that we will obtain identical or similar patent protection covering our products in all jurisdictions where we file patent applications. If the patent applications we hold or have in-licensed with respect to our development programs and product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for any product candidate, it could dissuade companies from collaborating with us to develop product candidates and threaten our ability to commercialize any product candidates that are approved. Any such outcome could have a materially adverse effect on our business. The patents and patent applications that we own or in-license may fail to result in issued patents with claims that protect our present and future product candidates in the United States or in other foreign countries. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which can prevent a patent from issuing from a pending patent application, or be used to invalidate a patent. Even if patents do successfully issue and even if such patents cover our present or future 82 Table of Contents product candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed, invalidated or held unenforceable. Any successful opposition to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any present or future product candidates or methods of using such. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced. The patent position of biopharmaceutical companies is generally uncertain and involve complex legal and factual questions and has been and will continue to be the subject of litigation and new legislation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, many countries restrict the patentability of methods of treatment of the human body. Publications of discoveries in scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions. As a result of these and other factors, the issuance, scope, validity, enforceability and commercial value of our patent rights are uncertain. The pending patent applications that we own or license may fail to result in issued patents with claims that cover our product candidates in the United States or in other countries for many reasons. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found, considered or cited during patent prosecution, which can be used to invalidate a patent or prevent a patent from issuing from a pending patent application. Moreover, we may in the future be subject to a third-party pre-issuance submission of prior art to the USPTO. We may also become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or the patent rights of others. For example, patents granted by the European Patent Office may be opposed by any person within nine months from the publication of their grant and, in addition, may be challenged before national courts at any time. The costs of defending our patents or enforcing our proprietary rights in post-issuance administrative proceedings and litigation can be substantial and the outcome can be uncertain. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for our product candidates or prevent others from designing around our claims. Any of these outcomes could impair our ability to prevent competitors from using the technologies claimed in any patents issued to us, which may have an adverse impact on our business. If the breadth or strength of protection provided by the patents and patent applications we hold, license or pursue with respect to our product candidates is threatened, it could threaten our ability to prevent third parties from using the same technologies that we use in our product candidates. The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. Generally, issued patents are granted a term of 20 years from the earliest claimed non-provisional filing date. In certain instances, patent term can be adjusted to recapture a portion of delay by the USPTO in examining the patent application (patent term adjustment) or extended to account for term effectively lost as a result of the FDA regulatory review period (patent term extension), or both. The scope of patent protection may also be limited. Without patent protection for our current or future product candidates, we may be open to competition from generic versions of such products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before 83 Table of Contents or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. Method of use patents protect the use of a product for the specified method or indication. In the absence of separate composition of matter protection, this type of patent does not prevent a competitor from making and marketing a product that is identical to our product candidate(s) for an indication that is outside of the methods of use claimed in our patents. Moreover, even if competitor products are not approved for use in our patented indications, and our competitors do not actively promote their products for indications that are covered by our patents, clinicians may prescribe these competitor products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement of method of use patents, such infringement is difficult to prevent or prosecute. We may not identify relevant patents or may incorrectly interpret the relevance, scope or expiration of a patent, which might adversely affect our ability to develop and market our products. We cannot guarantee that patent searches, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete and thorough, nor can we be certain that we have identified each and every patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of our product candidates in any jurisdiction. The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our products or pipeline candidates. We may incorrectly determine that our products are not covered by a third-party patent. Further, we may conclude that a well-informed court or other tribunal would find the claims of a relevant third-party patent to be invalid based on prior art, enablement, written description, or other ground, and that conclusion may be incorrect, which may negatively impact our ability to market our products or pipeline molecules. Many patents may cover a marketed product, including the composition of the product, methods of use, formulations, cell line constructs, vectors, growth media, production processes and purification processes. The identification of all patents and their expiration dates relevant to the production and sale of a reference product is extraordinarily complex and requires sophisticated legal knowledge in the relevant jurisdiction. It may be impossible to identify all patents in all jurisdictions relevant to a marketed product. We may not identify all relevant patents, or incorrectly determine their expiration dates, which may negatively impact our ability to develop and market our products. Failure to identify and correctly interpret relevant patents may negatively impact our ability to develop, market and commercialize our products. Changes in U.S. patent law or the patent law of other countries or jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates. The United States has enacted and implemented wide-ranging patent reform legislation. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on actions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce patents that we have licensed or that we might obtain in the future. For example, recent decisions raise questions regarding the award of patent term adjustment, or PTA, for patents in families where related patents have issued without PTA. Thus, it cannot be said with certainty how PTA will/will not be viewed in future and whether patent expiration dates may be impacted. Similarly, changes in patent law and regulations in other countries or jurisdictions or changes in the governmental bodies that enforce them or changes in how the relevant governmental authority enforces patent laws or regulations may weaken our ability to 84 Table of Contents obtain new patents or to enforce patents that we have licensed or that we may obtain in the future. For example, the complexity and uncertainty of European patent laws have also increased in recent years. In Europe, a new unitary patent system took effect on June 1, 2023, which will significantly impact European patents, including those granted before the introduction of such a system. Under the unitary patent system, all European patents, including those issued prior to June 1, 2023, now by default automatically fall under the jurisdiction of a new European Unified Patent Court, or the UPC, for litigation involving such patents. As the UPC is a relatively new court system, there is uncertainty regarding litigation at the UPC. Our European patent applications, if issued, could be challenged in the UPC. During the first seven years of the UPC’s existence, the UPC legislation allows a patent owner to opt its European patents out of the jurisdiction of the UPC. We may decide to opt out of our future European patents from the UPC, but doing so may preclude us from realizing the benefits of the UPC. Moreover, if we do not meet all of the formalities and requirements for opt-out under the UPC, our future European patents could remain under the jurisdiction of the UPC. The UPC will provide our competitors with a new forum to centrally revoke our European patents and allow for the possibility of a competitor to obtain a pan-European injunction. It is uncertain how the UPC will impact granted European patents in the pharmaceutical industry. Additionally, recent reforms and changes at government agencies of the United States and those of non-U.S. jurisdictions could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications, and the maintenance, enforcement, or defense of our issued patents. For example, the ability of the USPTO and other applicable patent authorities to properly administer their functions is highly dependent on the levels of funding available to the agency and their ability to retain key personnel and fill key leadership appointments, among various factors. Termination of employees or delays in replacing or hiring for key positions could significantly impact the ability of the USPTO and other applicable patent authorities to fulfill their functions and could greatly impact our ability to timely and adequately prosecute or maintain our patent applications, and our ability to timely and adequately maintain, enforce, or defend our issued patents. Third-party claims or litigation alleging infringement of patents or other proprietary rights, or seeking to invalidate our patents or other proprietary rights, may delay or prevent our development and commercialization efforts. Our commercial success depends in part on avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the pharmaceutical industry, including patent infringement lawsuits, interferences, reexamination, derivation and administrative law proceedings, inter partes review and post-grant review before the USPTO, as well as oppositions and similar processes in foreign jurisdictions. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing product candidates. As the biopharmaceutical industry expands and more patents are issued, the risk increases that our product candidates or other business activities may be subject to claims of infringement of the patent rights of third parties. Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to compositions, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Moreover, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents covering our product candidates. The existence of any patent with valid and enforceable claims covering one or more of our product candidates could cause substantial delays in our ability to introduce a candidate into the U.S. market if the term of such patent extends beyond our desired product launch date. There may also be patent applications that have been filed but not published and if such applications issue as patents, they could be asserted against us. For example, in most cases, a patent filed today would not become known to industry participants for at least 18 months given patent rules applicable in most jurisdictions that do not require publication of patent applications until 18 months after filing. In addition, third parties may obtain patent rights in the future and claim that use of our technologies infringes upon these rights. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such 85 Table of Contents patents expire. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, the holders of any such patent may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms. Furthermore, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our technologies, product candidate(s), or the use of our product candidate(s). As such, there may be applications of others now pending or recently revived patents of which we are unaware. These patent applications may later result in issued patents, or the revival of previously abandoned patents, that may be infringed by the manufacture, use, or sale of our technologies or product candidate(s) or will prevent, limit, or otherwise interfere with our ability to make, use, or sell our technologies and product candidate(s). Parties making claims against us may obtain injunctive or other equitable relief,