What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-14 · 85 added, 99 removed, 204 unchanged (47% 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 six months ended June 30, 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 nine months ended September 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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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.

Food and Drug Administration, or the FDA, advised us that it had put the Phase 2 RENEW 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.

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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 are seeking to activate sites, enroll patients and initiate the RENEW trial in the United Kingdom and Europe and other jurisdictions.

In October 2025, we received authorization from the European Medicines Agency, or the EMA, to initiate our Phase 2 RENEW trial, at sites in Germany and Poland, of our lead candidate, LTI-03, for the treatment of IPF.

We had previously received regulatory clearance from the U.K.’s Medicines and Healthcare products Regulatory Agency, or the MHRA.

On October 29, 2025 we were notified by the FDA that it had lifted the full clinical hold on our Phase 2 RENEW trial evaluating in patients with IPF.

The FDA’s decision follows a review of our submission, which addressed all of the agency’s concerns.

In its correspondence, the FDA confirmed that Study LTI-03-2001 may proceed and that any prior Full Clinical Hold concerns have been fully resolved.

We expect to resume patient recruitment in late 2025 or early 2026 across approximately 20 U.S.

clinical sites located in Alabama, California, Colorado, Connecticut, Florida, Indiana, Kansas, Massachusetts, Michigan, Missouri, North Carolina, New York, Ohio, South Carolina, and Texas.

enrollment complements our broader global RENEW study, which includes approximately 30 additional sites in the United Kingdom, Germany, Poland, and Australia.

The trial is designed to evaluate the safety, tolerability, and efficacy of LTI-03 in up to 120 patients with IPF.

Key secondary endpoints include changes in lung function (FVC) and imaging-based measures of fibrosis progression.

Initial topline data is expected in the third quarter 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, $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).

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 $1.9 million in net proceeds from the sale of the two pre-paid advances under the PPA (as defined below).

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

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.

Our net losses were $5.6 million and $5.8 million for the three months ended September 30, 2025 and 2024, respectively, and $17.9 million and $21.9 million for the nine months ended September 30, 2025 and 2024, respectively.

As of September 30, 2025, we had an accumulated deficit of $369.3 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 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.

As of September 30, 2025, we had cash and cash equivalents of $4.0 million.

The funds are not sufficient to enable us to complete the Phase 2 RENEW clinical trial of LTI-03 or maintain our current level of operations past December 2025 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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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.

under certain exchange cap limitations.

On September 8, 2025, Yorkville purchased a second Pre-Paid Advance, or the Second Advance, of $1.0 million, for which we received net proceeds of $0.95 million.

On October 23, 2025, Yorkville purchased a third Pre-Paid Advance, or the Third Advance, of $1.0 million, for which we received net proceeds of $0.95 million.

As of the date of this report, we have issued 953,765 shares of our common stock, at a weighted average price per share of approximately $1.056, to Yorkville, which were offset against $1.0 million of the outstanding principal and accrued interest under the initial Pre-Paid Advance, and issued 927,107 shares of our common stock, at a weighted average price per share of approximately $1.082, to Yorkville, which were offset against $1.0 million of the outstanding principal and accrued interest under the Second Pre-Paid Advance, and issued 846,290 shares of our common stock, at a weighted average price per share of approximately $1.183, to Yorkville, which were offset against $1.0 million of the outstanding principal and accrued interest under the Third Pre-Paid Advance.

The initial and second Pre-Paid Advances were fully settled as of September 30, 2025, with no remaining outstanding balance.

Accordingly, the fair value of the liabilities at September 30, 2025, was $0, and no adjustment for changes in fair value was required during the quarter.

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.

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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.

As of the date of this report, we have not issued shares of our common stock to Yorkville under the SEPA.

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.

Advisory Agreements

We have entered into various arrangements with certain business advisors, consultants, and investment institutions to assist us with fundraising and to provide certain advisory services.

In connection with these arrangements, we may be required to pay such business advisors, consultants, and investment institutions certain contingent fees related to their services to the extent that certain conditions are met, such as a the successful fundraising.

There are no contingent fees payable under these arrangements as of September 30, 2025.

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.

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

As of September 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.

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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.

We did not issue or 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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The total gross proceeds for the Warrant Exercises were $1.7 million.

On April 21, 2025, we also entered into privately negotiated letter agreements with additional holders of the PIPE Warrants who, in exchange for pre-funded warrants, or the Exchange Pre-Funded Warrants, to purchase an aggregate of 1,939,000 shares of common stock at an exercise price of $0.001 per share, surrendered PIPE Warrants to purchase an aggregate of 1,939,000 shares of common stock to us for cancellation and made an aggregate cash payment of $1.599 per share into which the Exchange Pre-Funded Warrants are exercisable, or the Warrant Exchanges.

stock to us for cancellation and made an aggregate cash payment of $1.599 per share into which the Exchange Pre-Funded Warrants are exercisable, or the Warrant Exchanges.

In the Warrant Exchanges, entities affiliated with Bios Equity Partners, LP, or Bios Partners, exchanged PIPE Warrants to purchase an aggregate of 1,300,500 shares common stock plus the required cash for Exchange Pre-Funded Warrants.

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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.

Pursuant to the agreement, we had contracted for up to $17.0 million of master services.

In August 2025, this master services agreement was terminated with no future commitment for the Company.

Exclusive Option Agreement with Advancium

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In July 2025, the Option Agreement was terminated.

Letter Agreement with Rients

In August 2025, the Company entered into a letter agreement with Rients LLC, or Rients, for Rients to evaluate the legacy ALRN-6924 compound, or the Compound Asset.

During the term of the letter agreement, Rients shall pay the Company for all fees and expenses incurred by the Company to maintain the Compound Asset.

Follow-on Public Offering

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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 public offering price of $4.68, and the underwriter purchased each Offering Share with an accompanying Offering Warrant at a combined price, after underwriting discounts, 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.

As of September 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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General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance and corporate and administrative functions.

General and administrative expenses are comprised of professional fees associated with being a public company including costs of accounting, auditing, legal, regulatory, tax and consulting services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs;

General and administrative expenses are comprised of professional fees associated with being a public company including costs of accounting, auditing, legal, regulatory, tax and consulting services associated with maintaining compliance with exchange listing and the SEC requirements, director and officer insurance costs;

and both public and investor relations costs.

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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 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.

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, original issue discount, or OID, related to the PPA, 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 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,

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

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

Three Months Ended September 30,

(in thousands)

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Research and Development Expenses

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.

Research and development expenses for the three months ended September 30, 2025 were $1.7 million, compared to $3.7 million for the three months ended September 30, 2024.

The decrease of $2.0 million was primarily a result of the clinical hold imposed on LTI-03.

During the three months ended September 30, 2025, we spent $0.6 million on clinical trials, $0.3 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 September 30, 2024, we spent $2.1 million on clinical trials, $1.0 million on manufacturing including $0.8 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 $2.6 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.

General and administrative expenses were $3.8 million for the three months ended September 30, 2025, compared to $2.3 million for the three months ended September 30, 2024.

The increase of $1.5 million in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily due to increased professional fees of $1.6 million as a result of vesting of restricted stock units granted in exchange for consulting services and the commitment fee related to the Yorkville Transactions, increased facilities and other expenses of $0.1 million, offset by decreased employee and related expenses of $0.2 million as a result of employee turnovers in 2024.

Other Income, net

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,

Other income, net was an expense of less than $0.1 million for the three months ended September 30, 2025, which primarily consisted of OID related to the PPA, offset by interest income and accretion in our then-current cash and cash equivalents.

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

Comparison of the nine months ended September 30, 2025 and 2024

Nine Months Ended September 30,

(in thousands)

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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.

Research and development expenses for the nine months ended September 30, 2025 were $9.0 million, compared to $10.9 million for the nine months ended September 30, 2024.

The decrease of $1.9 million was primarily a result of the clinical hold imposed on LTI-03.

During the nine months ended September 30, 2025, we spent $4.3 million on clinical trials, $2.2 million on manufacturing, $1.6 million on employee and related expenses, $0.1 million on professional fees and facilities and other expenses, and $0.8 million on regulatory and development consulting.

During the nine months ended September 30, 2024, we spent $4.2 million on clinical trials, $4.6 million on manufacturing including $3.2 million write-offs due to the expiration of clinical materials, and $0.5 million on regulatory and development consulting as well as $1.6 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.

General and administrative expenses were $8.9 million for the nine months ended September 30, 2025, compared to $11.4 million for the nine months ended September 30, 2024.

The decrease of $2.5 million in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily due to decreased professional fees of $0.2 million as a result of decrease in legal expense, offset by vesting of restricted stock units granted in exchange for consulting services and the commitment fee related to the Yorkville Transactions recognized during the three months ended September 30, 2025, and decreased employee and related expenses of $2.1 million as a result of employee turnover 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.

Other income, net of less than $0.1 million for the nine months ended September 30, 2025 primarily consisted of interest income and accretion in our then-current cash and cash equivalents, offset by OID related to the PPA.

Other income, net for the nine months ended September 30, 2024 was $0.4 million and it was primarily driven by fluctuations in foreign currency exchange rates and interest of our money market funds and treasury bills.

Liquidity and Capital Resources

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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.

As of September 30, 2025, we had cash and cash equivalents of $4.0 million.

Based on our current operating plan, we believe that our existing cash and cash equivalents as of September 30, 2025, together with the proceeds received by us pursuant to the PPA in October 2025, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into December 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.

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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.

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.

Pursuant to these letter agreements, these holders agreed to exercise for cash the PIPE Warrants for the purchase of an aggregate of 159,500 shares of common stock and the Offering Warrants for the purchase of an aggregate of 890,138 shares of common stock at a reduced exercise price of $1.60 per share on or before April 24, 2025 in the case of the PIPE Warrants and May 1, 2025 in the case of the Offering Warrants.

The total gross proceeds for the Warrant Exercises were $1.7 million.

On April 21, 2025, we also entered into privately negotiated letter agreements with additional holders of the PIPE Warrants who, in exchange for the Exchange Pre-Funded Warrants, surrendered PIPE Warrants to purchase an aggregate of 1,939,000 shares of common stock to us for cancellation and made an aggregate cash payment of $1.599 per share into which the Exchange Pre-Funded Warrants are exercisable on or before April 24, 2025.

In the Warrant Exchanges, entities affiliates with Bios Partners exchanged PIPE Warrants to purchase an aggregate of 1,300,500 shares of common stock plus the required cash for Exchange Pre-Funded Warrants.

The total gross proceeds for the Warrant Exchanges were $3.1 million.

In addition, on April 21, 2025, the Bios Purchaser purchased the Placement Pre-Funded Warrants pursuant to a subscription agreement at a price of $1.599 per share underlying the Placement Pre-Funded Warrants.

The Private Placement closed on April 24, 2025.

The total gross proceeds for the Private Placement were $0.5 million.

On May 15, 2025, we entered into the Wainwright Sales Agreement with H.C.

Wainwright, as agent and/or principal, pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to $13.7 million from time to time through or to H.C.

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.

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.

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

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 $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.

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

Each Offering Warrant has an exercise price per share of common stock equal to $4.68.

Each Offering Warrant may be exercised until May 1, 2027.

Each Offering Warrant is exercisable solely by means of a cash exercise, except that an Offering Warrant is exercisable via cashless exercise if at the time of exercise, a registration statement registering the issuance of Offering Warrant Shares is not then effective or the prospectus contained therein is not available for the issuance of such shares.

See the section titled “ Risk Factors ” found in our Annual Report on Form 10-K for additional risks associated with our substantial capital requirements.

We believe that our working capital as of September 30, 2025, together with the proceeds received by us pursuant to the PPA in October 2025, lack of revenue and recurring net losses raise substantial doubt about our ability to continue as a going concern.

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

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Operating Activities.

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 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.

During the nine months ended September 30, 2025, net cash used in operating activities was $16.1 million primarily due to our net loss of $17.9 million and cash used in the change in operating assets and liabilities of $0.6 million, offset by non-cash charges of $2.4 million.

Non-cash charges resulted primarily from stock-based compensation expense of $2.0 million, commitment fee related to the PPA of $0.3 million and OID related to the PPA of $0.1 million.

Changes in our operating assets and liabilities during the nine months ended September 30, 2025 consisted primarily of a decrease of $3.5 million in other long-term liabilities and accrued expenses and other current liabilities, and an increase of $0.3 million in prepaid expenses and other current assets, offset by an increase of $3.2 million in accounts payable.

During the nine months ended September 30, 2024, net cash used in operating activities was $17.5 million primarily due to our net loss of $21.9 million, offset by cash provided by the change in operating assets and liabilities of $3.4 million and non-cash charges of $1.0 million.

Non-cash charges resulted primarily from stock-based compensation expense of $1.0 million.

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.

Changes in our operating assets and liabilities during the nine months ended September 30, 2024 consisted primarily of a decrease of $2.2 million in other assets due to the recognition of a prepaid expense, and an increase of $1.4 million in accrued expenses and other current liabilities, offset by an increase of $0.1 million in prepaid expenses and other current assets and a decrease of $0.1 million in accounts payable.

Financing Activities.

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.

During the nine months ended September 30, 2025, net cash provided by financing activities was $7.4 million primarily due to the April 2025 Transactions and Yorkville Transactions described above.

During the nine months ended September 30, 2024, net cash provided by financing activities was $17.8 million primarily due to the Offering in May 2024.

Funding Requirements

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.

Subject to obtaining sufficient funding, our plan of operation is to continue implementing our business strategy, continue research and development of LTI-03 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.

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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, including when and if and under what conditions the clinical hold on LTI-03 is removed by the FDA;

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

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

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

Pursuant to the agreement, we had contracted for up to $17.0 million of master services.

This master services agreement was terminated in August 2025 with no future commitment for the Company.

Critical Accounting Estimates

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.

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 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.

During the three and nine months ended September 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 on Form 10-K.

Recent Accounting Pronouncements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis