What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-15 · 123 added, 50 removed, 180 unchanged (49% of the section changed)

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The following discussion and analysis are meant to provide material information relevant to an assessment of the financial condition and results of operations of our Company, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources, so as to allow investors to better view our Company from management’s perspective.

You should read the following discussion and analysis of our financial condition and results of operations together with ou r unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, included elsewhere in this Quarterly Report on Form 10-Q.

You should read the following discussion and analysis of our financial condition and results of operations together with ou r unaudited condensed consolidated financial statements for the six months ended June 30, 2025, included elsewhere in this Quarterly Report on Form 10-Q.

In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

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We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under Item 1A.

"Risk Factors" in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “Form 10-K”).

"Risk Factors" in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “Annual Report”).

Overview and Recent Developments

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In the fourth quarter of 2024, we determined that the temporary delay of further clinical development of LTI-01 may not be a short-term measure.

In May 2025, we initiated the RENEW Phase 2 clinical trial of LTI-03, with screening and recruitment of patients underway.

In May 2025, we initiated screening and recruitment of patients in the RENEW Phase 2 clinical trial of LTI-03.

The RENEW trial is a Phase 2 multi-center, randomized, double-blind, placebo-controlled study evaluating the safety, tolerability, and efficacy of LTI-03 patients with IPF.

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Patients will undergo a 28-day screening period prior to being randomized and entering the 24-week treatment period, with a four-week follow-up.

We expect to report interim topline data from the RENEW Phase 2 trial in the first half of 2026.

On June 10, 2025, the U.S.

Food and Drug Administration, or the FDA, advised us that it had put the RENEW Phase 2 trial of LTI-03 on clinical hold and we paused enrollment and patient dosing at our clinical trial sites in the United States.

On July 8, 2025, we received a formal Clinical Hold Letter from the FDA, or the Letter.

In the Letter, the FDA noted that no No-Observed-Adverse-Effect Level (NOAEL) had been identified and minimal mucus cell hyperplasia in the bronchioles had been observed in the 26-week rat study conducted in support of the RENEW trial.

The FDA stated that without a NOAEL, there is inadequate nonclinical support for the Phase 2 RENEW trial.

The FDA requested that we conduct a rat inhalation toxicity study using doses low enough to identify a NOAEL with a dosing duration sufficient to support the Phase 2 RENEW trial.

We believe that the data from the 26-week rat study supports the safety profile of LTI-03 and the conduct of the Phase 2 RENEW trial.

We intend to work with the FDA to address the clinical hold as expeditiously as possible.

Notwithstanding the clinical hold imposed on the RENEW Phase 2 trial in the United States, we are seeking to activate sites, enroll patients and initiate the RENEW trial in Australia, the United Kingdom and Europe.

Subject to resolving the clinical hold in the second half of 2025, we expect to report interim topline data from the RENEW Phase 2 trial in the first half of 2026.

We have not completed the development of any of our product candidates, have not generated any revenue from product sales and have never generated an operating profit.

To date, we have financed operations primarily through $145.5 million in net proceeds from sales of common stock and warrants, $0.7 million in net proceeds from sales of common stock under our “at-the-market” offering program, $131.2 million from sales of preferred stock prior to our initial public offering, or IPO, $34.9 million from a collaboration agreement in 2010, $17.5 million in net proceeds in connection with a private placement following the Lung Acquisition (as defined below) in 2023, $17.7 million in net proceeds in connection with the issuance and sale of shares and the accompanying warrants in our public offering in May 2024, and $5.3 million in gross proceeds in connection with the April 2025 Transactions (as defined below) in April 2025.

To date, we have financed operations primarily through $145.5 million in net proceeds from sales of common stock and warrants, $0.7 million in net proceeds from sales of common stock under our “at-the-market” offering program, $131.2 million from sales of preferred stock prior to our initial public offering, or IPO, $34.9 million from a collaboration agreement in 2010, $17.5 million in net proceeds in connection with a private placement following the Lung Acquisition (as defined below) in 2023, $17.7 million in net proceeds in connection with the issuance and sale of shares and the accompanying warrants in our public offering in May 2024, $5.3 million in gross proceeds in connection with the April 2025 Transactions (as defined below) in April 2025, and $0.95 million in net proceeds from the sale of the initial pre-paid advance under the PPA (as defined below).

Since our inception, we have incurred significant losses on an aggregate basis.

Our net losses were $5.5 million and $7.1 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, we had an accumulated deficit of $356.9 million.

These losses have resulted primarily from costs incurred in connection with research and development activities, licensing and

patent investment and general and administrative costs associated with our operations.

Our net losses were $6.8 million and $8.9 million for the three months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, we had an accumulated deficit of $363.7 million.

These losses have resulted primarily from costs incurred in connection with research and development activities, licensing and patent investment and general and administrative costs associated with our operations.

We expect to continue to incur operating losses for the foreseeable future.

As of March 31, 2025, we had cash and cash equivalents of $7.4 million.

Based on our current operating plan, we believe that our existing cash and cash equivalents, together with the proceeds raised in the April 2025 Transactions, will enable us to fund our planned operating expense and capital expenditure requirements into September 2025.

The funds are not sufficient to enable us to complete our Phase 2 clinical trial of LTI-03 and we will need to obtain additional funding prior to completing the trial.

As of June 30, 2025, we had cash and cash equivalents of $5.7 million.

Based on our current operating plan, we believe that our existing cash and cash equivalents, together with the proceeds received by us pursuant to the PPA in July 2025 described below, will enable us to fund our planned operating expense and capital expenditure requirements into November 2025.

The funds are not sufficient to enable us to complete the RENEW Phase 2 clinical trial of LTI-03 and we will need to obtain additional funding prior to completing the trial.

Our future viability is dependent on our ability to raise additional capital to finance our operations.

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There is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, or at all.

If we are unable to obtain sufficient funding on terms acceptable to us, on a timely basis or at all, we may be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect our business prospects, or we may be unable to continue operations.

Pre-Paid Advance Agreement and Standby Equity Purchase Agreement with Yorkville

On July 29, 2025, we entered into a Pre-Paid Advance Agreement, or the PPA, and a Standby Equity Purchase Agreement, or the SEPA, with YA II PN, Ltd., a Cayman Islands exempt limited partnership, or Yorkville.

The PPA and the SEPA are collectively referred to as the Yorkville Transactions.

Under the PPA, we may request up to $6.0 million in pre-paid advances from Yorkville over a 12-month period, subject to certain limitations and conditions set forth in the PPA.

Each pre-paid advance will be purchased by Yorkville at 95% of the face amount of the pre-paid advance.

An initial pre-paid advance of $1.0 million was purchased on July 29, 2025 by Yorkville, for net proceeds of $0.95 million.

Each additional pre-paid advance shall be subject to the consent of Yorkville.

Interest shall accrue on the outstanding balance of any pre-paid advance at an annual rate of 8%, subject to an increase to 18% upon events of default described in the PPA.

At any time that there is an outstanding balance under any pre-paid advances, Yorkville may provide a written notice to require us to issue and sell shares of common stock to offset against and reduce the balance under the pre-paid advances at a price per share equal to the lower of (i) 115% of the daily volume weighted average price, or the VWAP, of our common stock on the Nasdaq Capital Market on the last full trading day immediately prior to the date of such pre-paid advance and (ii) 95% of the lowest daily VWAP on the Nasdaq Capital Market during the seven consecutive trading days immediately preceding the date on which Yorkville provides such a purchase notice, subject to a floor price of $0.28 per share.

Cash amortization payments will be triggered if the daily VWAP falls below the floor price for five of seven consecutive trading days, or in the event of any shares issued pursuant to the PPA are not eligible to be sold pursuant to an effective registration statement for a period of 10 consecutive trading days, or if we have issued substantially all of the shares available under certain exchange cap limitations.

Separately, under the SEPA, we may sell up to $15.0 million of our common stock to Yorkville over a 36-month period at our discretion.

Sales under the SEPA are based on our advance notices and may be for a number of shares up to 100% of the average daily trading volume of our common stock during the five trading days immediately prior to the date of each such notice, priced at 96% of the lowest daily VWAP of our common stock on the Nasdaq Capital Market during the three consecutive trading days commencing on the date of delivery each notice, subject to a minimum price floor set by us.

As consideration for Yorkville’s commitment to purchase our common stock under the SEPA, we agreed to pay to Yorkville a commitment fee of $0.3 million, which was satisfied by the issuance to Yorkville of an aggregate of 213,099 shares of our common stock.

The issuance of shares under both the PPA and SEPA is subject to a cap equal to 19.9% of our outstanding common stock as of July 29, 2025, unless stockholder approval is obtained or other specified conditions are met.

Sales Agreement with H.C.

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Wainwright by any method permitted that is deemed to be an “at the market” offering as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended.

Prior to entering into the Wainwright Sales Agreement, we terminated the equity distribution agreement, dated July 26, 2024, or the Equity Distribution Agreement, with Citizens JMP Securities, LLC, or Citizens JMP, as agent and/or principal, under which we could offer and sell up to $50.0 million of shares of our common stock from time to time through or to Citizens JMP by any method that was deemed to be an “at the market” offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended.

As of June 30, 2025, we had issued and sold 16,127 shares of common stock pursuant to the Wainwright Sales Agreement.

In July 2025, in connection with the Yorkville Transactions, we reduced the aggregate offering price of the shares of common stock that could be offered and sold under the Wainwright Sales Agreement to $8.1 million.

Prior to entering into the Wainwright Sales Agreement, in May 2025, we terminated the equity distribution agreement, dated July 26, 2024, or the Equity Distribution Agreement, with Citizens JMP Securities, LLC, or Citizens JMP, as agent and/or principal, under which we could offer and sell up to $50.0 million of shares of our common stock from time to time through or to Citizens JMP by any method that was deemed to be an “at the market” offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended.

In January 2025, we issued and sold 317,772 shares of common stock pursuant to the Equity Distribution Agreement for total net proceeds of $0.7 million.

We did not issue and sell any other shares of common stock pursuant to the Equity Distribution Agreement in 2025.

April 2025 Warrant Transactions and Private Placement

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We refer to the Warrant Exercises, the Warrant Exchanges and the Private Placement as the April 2025 Transactions.

Master Services Agreement

In April 2025, we entered into a master services agreement with a third party Contract Research Organization, or CRO, under which the CRO has agreed to perform certain services in accordance with written work orders.

The work orders set forth the obligations of the parties with regard to conducting the clinical research study entitled “A Randomized, Double-Blind, Placebo-Controlled, Phase 2, Safety, Tolerability and Efficacy Study of Caveolin1-Scaffolding-Protein-Derived Peptide (LTI-03) in Patients with IPF”, under our Protocol LTI-03-2001.

Our total potential obligation under the master services agreement is approximately $17.0 million.

Exclusive Option Agreement with Advancium

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Under the terms of the option agreement Advancium paid us a non-refundable fee of $0.1 million for the exclusive option to acquire ALRN-6924 and related assets.

If Advancium exercises its option, we will receive an exercise payment with potential for additional development, regulatory and commercial milestone payments and sales royalties.

If Advancium exercised its option, we would receive an exercise payment with potential for additional development, regulatory and commercial milestone payments and sales royalties.

In July 2025, the Option Agreement was terminated.

Follow-on Public Offering

In May 2024, we completed an underwritten follow-on public offering, or the Offering, pursuant to which we issued and sold 4,273,505 shares of our common stock, or the Offering Shares, and accompanying warrants, or the Offering Warrants, to purchase

4,273,505 shares of common stock, or the Offering Warrant Shares.

We sold all of the Offering Shares and Offering Warrants.

Each Offering Share was offered and sold together with an accompanying Offering Warrant at a combined offering price of $4.68, and the underwriter purchased each Offering Share with an accompanying Offering Warrant at a combined price of $4.35.

Each Offering Share was offered and sold together with an accompanying Offering Warrant at a combined offering price of $4.68, and the

underwriter purchased each Offering Share with an accompanying Offering Warrant at a combined price of $4.35.

Net proceeds from the Offering were $17.7 million, after deducting underwriting discounts and commissions and offering expenses, and excluding any proceeds that may be received from exercise of the Offering Warrants.

As of June 30, 2025, Offering Warrants to purchase 3,383,367 shares of common stock remained outstanding.

Components of Our Results of Operations

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We anticipate that our interest income will fluctuate in the future in response to our cash and cash equivalents and the interest rate environment.

Other income, net consists of the income recognized under the Option Agreement with Advancium, gains or losses recognized from non-routine items such as accretion on short-term investments, and gains or losses recognized from foreign currency transactions, and the disposal of fixed assets.

Other income, net consists of the income recognized under the exclusive option agreement with Advancium Health Network, or Advancium, for the sale of ALRN-6924 (the “Option Agreement”), gains or losses recognized from non-routine items such as accretion on short-term investments, and gains or losses recognized from foreign currency transactions, and the disposal of fixed assets.

We anticipate that our interest income and investment accretion will fluctuate in the future in response to our then-current cash and cash equivalents, and then-current interest rates.

Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2025 and 2024

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

Three Months Ended June 30,

(in thousands)

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Research and Development Expenses

Research and development expenses for the three months ended March 31, 2025 were $3.1 million, compared to $3.5 million for the three months ended March 31, 2024.

The decrease of $0.4 million was primarily a result of the temporary delay of further clinical development of LTI-01.

During the three months ended March 31, 2025, we spent $1.3 million on clinical trials, $0.9 million on manufacturing, $0.6 million on employee and related expenses, and $0.2 million on regulatory and development consulting.

three months ended March 31, 2024, we spent $1.1 million on clinical trials, $1.6 million on manufacturing, $0.6 million on employee and related expenses, and $0.2 million on regulatory and development consulting.

Research and development expenses for the three months ended June 30, 2025 were $4.3 million, compared to $3.7 million for the three months ended June 30, 2024.

The increase of $0.6 million was primarily a result of the RENEW Phase 2 clinical trial of LTI-03 that was initiated in May 2025.

During the three months ended June 30, 2025, we spent $2.5 million on clinical trials, $1.0 million on manufacturing, $0.5 million on employee and related expenses, and $0.3 million on regulatory and development consulting.

During the three months ended June 30, 2024, we spent $1.1 million on clinical trials, $2.0 million on manufacturing including $1.8 million

write-offs due to the expiration of clinical materials, and $0.1 million on regulatory and development consulting as well as $0.5 million on employee and related expenses associated with clinical programs acquired in the Lung Acquisition.

General and Administrative Expenses

General and administrative expenses were $2.5 million for the three months ended March 31, 2025, compared to $3.7 million for the three months ended March 31, 2024.

The decrease of $1.2 million in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily due to decreased professional fees of $0.9 million as a result of decrease in legal expense and decreased employee and related expenses of $0.3 million as a result of employee turnovers in 2024.

General and administrative expenses were $2.6 million for the three months ended June 30, 2025, compared to $5.3 million for the three months ended June 30, 2024.

The decrease of $2.7 million in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily due to decreased professional fees of $1.0 million as a result of decrease in legal expense and decreased employee and related expenses of $1.6 million as a result of employee turnovers in 2024.

Other Income, net

Other income, net of $0.1 million for the three months ended March 31, 2025 primarily consisted of interest income and accretion in our then-current cash and cash equivalents.

Other income, net was less than $0.1 million for the three months ended June 30, 2025, which primarily consisted of interest income and accretion in our then-current cash and cash equivalents.

Other income, net for the three months ended June 30, 2024 was less than $0.1 million and it was primarily driven by fluctuations in foreign currency exchange rates and interest of our money market funds.

Comparison of the Six Months Ended June 30, 2025 and 2024

Six Months Ended June 30,

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income, net

Research and Development Expenses

Research and development expenses for the six months ended June 30, 2025 were $7.3 million, compared to $7.2 million for the six months ended June 30, 2024.

The increase of $0.1 million was primarily a result of the RENEW Phase 2 clinical trial of LTI-03 that was initiated in May 2025.

During the six months ended June, 2025, we spent $3.8 million on clinical trials, $1.9 million on manufacturing, $1.1 million on employee and related expenses, and $0.4 million on regulatory and development consulting.

During the six months ended June 30, 2024, we spent $2.2 million on clinical trials, $3.6 million on manufacturing including $2.4 million write-offs due to the expiration of clinical materials, and $0.3 million on regulatory and development consulting as well as $1.1 million on employee and related expenses associated with clinical programs acquired in the Lung Acquisition.

General and Administrative Expenses

General and administrative expenses were $5.1 million for the six months ended June 30, 2025, compared to $9.0 million for the six months ended June 30, 2024.

The decrease of $3.9 million in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily due to decreased professional fees of $1.8 million as a result of decrease in legal expense and decreased employee and related expenses of $1.9 million as a result of employee turnovers in 2024 as well as decreased facilities and other expenses of $0.2 million.

Other Income, net

Other income, net of $0.2 million for the six months ended June 30, 2025 primarily consisted of interest income and accretion in our then-current cash and cash equivalents.

Other income, net for the six months ended June 30, 2024 was less than $0.2 million and it was primarily driven by fluctuations in foreign currency exchange rates and interest of our money market funds.

Liquidity and Capital Resources

Since inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations.

We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our lead product candidates, LTI-03 and LTI-01, or any future product candidates.

We expect that our research and development and general and administrative costs will continue to increase significantly, including in connection with conducting clinical trials and manufacturing for our lead product candidates or any future product candidates to support potential future commercialization and providing general and administrative support for our operations, including the costs associated with operating as a public company.

As of March 31, 2025, we had cash and cash equivalents of $7.4 million.

Based on our current operating plan, we believe that our existing cash and cash equivalents as of March 31, 2025, together with the proceeds from the April 2025 Transactions, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into September 2025.

If we obtain funding for our continued operations, we expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our lead product candidates, LTI-03 and LTI-01, or any future product candidates.

We expect that our research and development and general and administrative costs would continue to increase significantly, including in connection with conducting clinical trials and manufacturing for our lead product candidates or any future product candidates to support potential future commercialization and providing general and administrative support for our operations, including the costs associated with operating as a public company.

As of June 30, 2025, we had cash and cash equivalents of $5.7 million.

Based on our current operating plan, we believe that our existing cash and cash equivalents as of June 30, 2025, together with the proceeds received by us pursuant to the PPA in July 2025, will

be sufficient to enable us to fund our operating expenses and capital expenditure requirements into November 2025.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, strategic collaborations, licensing arrangements or other sources.

See the section titled “ Risk Factors ” found elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on April 7, 2025 for additional risks associated with our substantial capital requirements.

To date, we have funded our operations through sales of common stock in our initial public offering, sales of common stock and warrants in follow-on public offerings, sales of common stock and warrants in a private placement, sales of common stock in “at-the-market” offerings, sales of preferred stock prior to our initial public offering, payments received under a collaboration agreement, sales of common stock, preferred stock and warrants in connection with the Lung Acquisition and the PIPE Financing and sales of common stock upon option and warrant exercises.

See the section titled “ Risk Factors ” found in our Annual Report for additional risks associated with our substantial capital requirements.

To date, we have funded our operations through sales of common stock in our initial public offering, sales of common stock and warrants in follow-on public offerings, sales of common stock and warrants in a private placement, sales of common stock in “at-the-market” offerings, sales of preferred stock prior to our initial public offering, payments received under a collaboration agreement, sales of common stock, preferred stock and warrants in connection with the Lung Acquisition and the PIPE Financing, sales of common stock upon option and warrant exercises and sale of the initial pre-paid advance under the PPA.

On April 21, 2025, we entered into privately negotiated letter agreements with certain holders of the PIPE Warrants and certain holders of the Offering Warrants.

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Under General Instruction I.B.6 to Form S-3, the amount of funds we can raise through primary public offerings of securities in any 12-month period using our registration statement on Form S-3 is limited to one-third of the aggregate market value of our common stock held by non-affiliates.

Prior to entering into the Wainwright Sales Agreement, we terminated the Equity Distribution Agreement with Citizens JMP.

As of June 30, 2025, we had issued and sold 16,127 shares of common stock pursuant to the Wainwright Sales Agreement.

Prior to entering into the Wainwright Sales Agreement, in May 2025, we terminated the Equity Distribution Agreement with Citizens JMP.

In January 2025, we issued and sold 317,772 shares of common stock pursuant to the Equity Distribution Agreement for total net proceeds of $0.7 million.

We did not issue and sell any other shares of common stock pursuant to the Equity Distribution Agreement in 2025.

On July 29, 2025, we entered into the PPA and the SEPA with Yorkville.

Under the PPA, we may request up to $6.0 million in pre-paid advances from Yorkville over a 12-month period, subject to certain limitations and conditions set forth in the PPA.

Each pre-paid advance will be purchased by Yorkville at 95% of the face amount of the pre-paid advance.

An initial pre-paid advance of $1.0 million was purchased on July 29, 2025 by Yorkville, for net proceeds of $0.95 million.

Each additional pre-paid advance shall be subject to the consent of Yorkville.

Interest shall accrue on the outstanding balance of any pre-paid advance at an annual rate of 8%, subject to an increase to 18% upon events of default described in the PPA.

Separately, under the SEPA, we may sell up to $15.0 million of our common stock to Yorkville over a 36-month period at our

As consideration for Yorkville’s commitment to purchase our common stock under the SEPA, we agreed to pay to Yorkville a commitment fee of $300,000, which was satisfied by the issuance to Yorkville of an aggregate of 213,099 shares of our common stock.

In May 2024, we completed the Offering as described above.

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The following table summarizes our sources and uses of cash for each of the periods presented:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

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Cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash, cash equivalents and restricted cash

Operating Activities.

During the three months ended March 31, 2025, net cash used in operating activities was $6.2 million primarily due to our net loss of $5.5 million and cash used in the change in operating assets and liabilities of $1.0 million, offset by non-cash charges of $0.3 million.

During the six months ended June 30, 2025, net cash used in operating activities was $12.6 million primarily due to our net loss of $12.3 million and cash used in the change in operating assets and liabilities of $0.8 million, offset by non-cash charges of $0.5 million.

Non-cash charges resulted primarily from stock-based compensation expense of $0.5 million.

Changes in our operating assets and liabilities during the three months ended March 31, 2025 consisted primarily of a decrease of $0.3 million in other long-term liabilities and accrued expenses and other current liabilities, and increase of $0.8 million in other non-current assets, and an increase of $0.1 million in prepaid expenses and other current assets, offset by an increase of $0.2 million in accounts payable.

During the three months ended March 31, 2024, net cash used in operating activities was $5.3 million primarily due to our net loss of $7.1 million, offset by cash provided by the change in operating assets and liabilities of $1.6 million and non-cash charges of $0.2 million.

Changes in our operating assets and liabilities during the six months ended June 30, 2025 consisted primarily of a decrease of $3.5 million in other long-term liabilities and accrued expenses and other current liabilities, an increase of $2.3 million in other non-current assets, and an increase of $0.1 million in prepaid expenses and other current assets, offset by an increase of $5.1 million in accounts payable.

During the six months ended June 30, 2024, net cash used in operating activities was $13.7 million primarily due to our net loss of $16.1 million, offset by cash provided by the change in operating assets and liabilities of $1.8 million and non-cash charges of $0.6 million.

Non-cash charges resulted primarily from stock-based compensation expense of $0.5 million.

Changes in our operating assets and liabilities during the three months ended March 31, 2024 consisted primarily of a decrease of $1.3 million in other assets due to the recognition of a prepaid expense, and an increase of $1.0 million in accounts payable, offset by a decrease of $0.8 million in accrued expenses and other current liabilities.

Changes in our operating assets and liabilities during the six months ended June 30, 2024 consisted primarily of a decrease of $1.5 million in other assets due to the recognition of a prepaid expense, and an increase of $1.0 million in accrued expenses and other current liabilities, offset by an increase of $0.3 million in prepaid expenses and other current assets and a decrease of $0.4 million in accounts payable.

Financing Activities.

During the three months ended March 31, 2025, net cash provided by financing activities was $0.7 million primarily due to the sale of 317,772 shares of common stock pursuant to the Equity Distribution Agreement.

During the three months ended March 31, 2024, net cash provided by financing activities was $0 million.

During the six months ended June 30, 2025, net cash provided by financing activities was $5.5 million primarily due to the April 2025 Transactions described above.

During the six months ended June 30, 2024, net cash provided by financing activities was $18.3 million primarily due to the Offering in May 2024.

Funding Requirements

Our plan of operation is to continue implementing our business strategy, continue research and development of LTI-03 and LTI-01 and any other product candidates we may acquire or develop and continue to expand our research pipeline and our internal research and development capabilities.

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our current and future product candidates.

In addition, we expect to incur additional costs associated with operating as a public company.

Subject to obtaining sufficient funding, our plan of operation is to continue implementing our business strategy, continue research and development of LTI-03 and LTI-01 and any other product candidates we may acquire or develop and continue to expand our research pipeline and our internal research and development capabilities.

We expect our expenses would increase substantially, particularly as we advance the preclinical activities and clinical trials of our current and future product candidates.

In addition, we expect that we would incur additional costs associated with operating as a public company.

Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.

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• the number of clinical trials required for regulatory approval of our current and future product candidates;

• the costs, timing, and outcome of regulatory review of any of our current and future product candidates;

• the costs, timing, and outcome of regulatory review of any of our current and future product candidates, including when and if and under what conditions the clinical hold on LTI-03 is removed by the FDA;

• the cost of manufacturing clinical and commercial supplies of our current and future product candidates;

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A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of the product candidates.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations from the sale of additional equity or debt financings, strategic collaborations, licensing, arrangements or other sources.

Until such time as we can generate significant revenue from product sales, if ever, we expect to seek to finance our operations from the sale of equity or debt financings, strategic collaborations, licensing, arrangements or other sources.

In the event that additional financing is required, we may not be able to raise it on terms acceptable to us, or at all.

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Our management’s discussion and analysis of financial condition and results of operations is based on our unaudited condensed consolidated financial statements to this Quarterly Report on Form 10-Q, which have been prepared in accordance with generally accepted accounting principles in the United States.

The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements.

disclosure of contingent assets and liabilities in our consolidated financial statements.

We base our estimates on historical experience, known trends and events and various other factors that we believe are 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.

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Our actual results may differ from these estimates under different assumptions or conditions.

During the three months ended March 31, 2025, there were no material changes to the items that we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on April 7, 2025.

During the three and six months ended June 30, 2025, there were no material changes to the items that we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

Recent Accounting Pronouncements

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Quantitative and Qualitati ve Disclosures About Market Risk.

We are a smaller reporting company, as defined in Rule 12b-2 under the Exchange Act for this reporting period and are not required to provide the information required under this item.

We are a smaller reporting company, as defined in Rule 12b-2 under the Securities and Exchange Act of 1934, as amended, or the Exchange Act, for this reporting period and are not required to provide the information required under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis