Rein Therapeutics, Inc. 10-K

Item 9A. Controls and Procedures Limitations on Effectiveness of Controls and Procedures The term “disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a 96 company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and our interim Chief Financial Officer, evaluated, as of the end of the period covered by this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and our interim Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2025, because of the identified material weaknesses in our internal control over financial reporting described below. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2025 as a result of the material weaknesses discussed below. Material Weaknesses We identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. We identified the following material weaknesses in internal control over financial reporting: (i) lack of sufficient 97 accounting and supervisory personnel who have the appropriate level of technical accounting experience and training, and (ii) lack of adequate procedures and controls to ensure that accurate financial statements could have been prepared and reviewed on a timely basis for annual reporting purposes. Management’s Plan to Remediate the Material Weaknesses The below are actions that we have taken to date to remediate the above-mentioned material weaknesses: • Enhanced the execution of our risk assessment activities by evaluating whether the design of our internal controls appropriately addresses changes in the business (including changes to people, processes and systems) that could impact our system of internal controls. • Completed the integration of the acquired systems from the Lung Acquisition into our financial and accounting systems to allow for systematic segregation of duties, and to enhance the accurate and timely preparation and review of financial statements and supporting schedules. • Engaged a third-party to assist in assessing the design and implementation of controls and develop remediation plans for identified control gaps related to our timely preparation and review of account reconciliations, financial statements and supporting schedules. • Reported regularly to the audit committee on the progress and results of the remediation plan, including the identification, status and resolution of internal control deficiencies. • Continued to reassess staffing and add additional resources, as required, with the requisite technical accounting experience and training, to further allow for segregation of duties and to support our system of internal control. In addition to implementing and executing the aforementioned activities, the following activities are expected to be completed in fiscal year 2026: • Implement remediation plans for identified control design and implementation gaps. • Continue to act upon the enhancements to our internal controls that we implemented in 2025. • Perform testing of operating effectiveness of identified controls over financial reporting including IT General Controls. • As needed, we will also supplement our internal resources with additional third-party resources to enhance our corporate oversight and monitoring over process-level controls and structures to ensure that there is appropriate assignment of authority, responsibility, and accountability. The material weaknesses will not be considered remediated until management completes the design and implementation of the measures described above and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. Management believes that the remediation measures described above will be implemented in a manner such that the controls can be tested, and the identified material weaknesses can be determined to be remediated, however, no assurance can be made that such remediation will occur or that additional material weaknesses will not be identified. Changes in Internal Control Over Financial Reporting In connection with our December 31, 2024 10-K, a material weakness in our internal control over financial reporting was identified relating to segregation of duties within our financial accounting system and lack of reviews of account reconciliation and supporting schedules. Management implemented measures designed to ensure that the control deficiencies related to the material weaknesses were remediated, such that the controls are designed, implemented and operating effectively. The remediation actions included hiring of additional accounting personnel which allowed for proper segregation of duties within the financial accounting system and the implementation of internal controls related to the account reconciliation process. Other than the changes to remediate the material weaknesses and the related ongoing remediation activities described above, no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) has occurred during the year 98 ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information Rule 10b5-1 Trading Plans During the fourth quarter of 2025, none of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K. Ite m 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 99 PART III Item 10. Directors, Executive Off icers and Corporate Governance The information required by this Item 10 will be included in our definitive proxy statement to be filed with the Securities and Exchange Commission, or the SEC, with respect to our 2026 Annual Meeting of Stockholders, which is expected to be filed no later than 120 days after the end of our last fiscal year ended December 31, 2025 and is incorporated herein by reference. We have adopted a Code of Business Conduct and Ethics that applies to our officers, including our principal executive, financial and accounting officers, and our directors and employees. We have posted the text of our Code of Business Conduct and Ethics under the “Investors & Media — Governance” section of our website, www.reintx.com. We intend to disclose on our website any amendments to, or waivers from, the Code of Business Conduct and Ethics that are required to be disclosed pursuant to the disclosure requirements of Item 5.05 of Form 8-K. Item 11. Executiv e Compensation The information required by this Item 11 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders, which is expected to be filed no later than 120 days after the end of our last fiscal year ended December 31, 2025 and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Own ers and Management and Related Stockholder Matters. The information required by this Item 12 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders, which is expected to be filed no later than 120 days after the end of our last fiscal year ended December 31, 2025 and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this Item 13 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders, which is expected to be filed no later than 120 days after the end of our last fiscal year ended December 31, 2025 and is incorporated herein by reference. Item 14. Principal Accoun ting Fees and Services The information required by this Item 14 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders, which is expected to be filed no later than 120 days after the end of our last fiscal year ended December 31, 2025 and is incorporated herein by reference. 100 PART IV Item 15. Exhibits, Financ ial Statement Schedules The following documents are filed as part of this Report: (a) Financial Statements . The following documents are included on pages F6-F38 attached hereto and are filed as part of this Annual Report on Form 10-K: (b) Financial Statement Schedules . Schedules have been omitted since they are either not required or not applicable or the information is otherwise included herein. (c) Exhibits . The exhibits filed as part of this Annual Report on Form 10-K are set forth on the Exhibit Index below. The Exhibit Index is incorporated herein by reference. Ite m 16. Form 10-K Summary None. Exhibit Index Incorporation by Reference Exhibit Number Description Form Date of Filing Exhibit Number Filed Herewith 2.1# Agreement and Plan of Merger, dated October 31, 2023, by and among Aileron Therapeutics, Inc., AT Merger Sub I, Inc., AT Merger Sub II, LLC and Lung Therapeutics, Inc. 8-K 10/31/2023 2.1 3.1 Restated Certificate of Incorporation of the Registrant, as amended 10-Q 8/11/2021 3.1 3.2 Certificate of Amendment of Restated Certificate of Incorporation of the Registrant, dated as of November 10, 2022 8-K 11/10/2022 3.1 3.3 Certificate of Amendment of Restated Certificate of Incorporation of the Registrant, dated as of February, 29, 2024 10-K 4/15/2024 3.3 3.4 Certificate of Amendment of Restated Certificate of Incorporation of the Registrant, dated as of January 10, 2025 8-K 1/10/2025 3.1 3.5 Amended and Restated By-laws of the Registrant 8-K 1/10/2025 3.2 4.1 Specimen stock certificate evidencing shares of common stock S-1^ 6/19/2017 4.1 4.2 Description of Securities of the Registrant 10-K 4/15/2024 4.2 4.3 Certificate of Designation of Series X Non-Voting Convertible Preferred Stock 8-K 10/31/2023 3.1 4.4 Form of Warrant to Purchase Common Stock issued pursuant to the Stock and Warrant Purchase Agreement 8-K 10/31/2023 4.1 10.1* 2016 Stock Incentive Plan S-1^ 6/2/2017 10.4 101 10.2* Form of Incentive Stock Option Agreement under 2016 Stock Incentive Plan S-1^ 6/2/2017 10.5 10.3* Form of Nonstatutory Stock Option Agreement under 2016 Stock Incentive Plan S-1^ 6/2/2017 10.6 10.4* 2017 Stock Incentive Plan S-1^ 6/19/2017 10.8 10.5* Form of Incentive Stock Option Agreement under 2017 Stock Incentive Plan S-1^ 6/19/2017 10.9 10.6* Form of Nonstatutory Stock Option Agreement under 2017 Stock Incentive Plan S-1^ 6/19/2017 10.10 10.7* 2017 Employee Stock Purchase Plan S-1^ 6/19/2017 10.11 10.8* Aileron Therapeutics, Inc. 2021 Stock Incentive Plan, as amended 10-K 4/15/2024 10.11 10.9* Form of Stock Option Agreement under 2021 Stock Incentive Plan 10-K 3/20/2023 10.12 10.10* Form of Restricted Stock Unit Agreement under 2021 Stock Incentive Plan 10-K 3/20/2023 10.13 10.11 Form of Director and Officer Indemnification Agreement S-1^ 6/19/2017 10.12 10.13* Consulting Agreement, dated as of April 15, 2023, between the Registrant and D. Allen Annis, Ph.D. 10-Q 5/8/2023 10.2 10.14 Waiver Under Amended and Restated License Agreement, dated as of February 19, 2010, by and among the Registrant, President and Fellows of Harvard College and Dana-Farber Cancer Institute, Inc. 10-Q 10/13/2023 10.1 10.15# Stock and Warrant Purchase Agreement, dated as of October 31, 2023, by and among Aileron Therapeutics, Inc. and each purchaser identified on Annex A thereto 8-K 10/31/2023 10.1 10.16 Form of Registration Rights Agreement, by and among Aileron Therapeutics, Inc. and certain purchasers named therein 8-K 10/31/2023 10.2 10.17* Executive Employment Agreement, dated as of February 1, 2014, by and between Lung Therapeutics, Inc. and Brian Windsor, Ph.D., as amended 8-K 10/31/2023 10.3 10.18* Letter Agreement, dated as of February 11, 2023, by and between Lung Therapeutics, Inc. and Brian Windsor, Ph.D. 8-K 10/31/2023 10.4 10.19* Letter Agreement, dated as of October 30, 2023, by and between Lung Therapeutics, Inc. and Brian Windsor, Ph.D. 8-K 10/31/2023 10.5 10.20+# Exclusive License Agreement, dated as of November 12, 2020, by and between Lung Therapeutics, Inc. and Taiho Pharmaceutical Co. Ltd. 8-K 1/25/2024 10.1 102 10.21+ Amended and Restated Patent and Technology License Agreement, effective as of December 19, 2013, by and between Lung Therapeutics, Inc. and the Board of Regents of The University of Texas System, on behalf of The University of Texas Health Science Center at Tyler, as amended by First Amendment, effective as of May 4, 2017. 8-K 1/25/2024 10.2 10.22+ Patent License Agreement, effective as of May 21, 2015, by and between Lung Therapeutics, Inc. and the University of Texas at Austin, on behalf of The University of Texas System, as amended by Amendment #1, dated as of January 26, 2017, Amendment #2, dated as of November 19, 2018, Amendment #3, effective as of June 20, 2019, and Amendment #4, dated as of April 28, 2023. 8-K 1/25/2024 10.3 10.23+ Amended and Restated License Agreement, effective as of September 1, 2018, by and between Lung Therapeutics, Inc. and Medical University of South Carolina Foundation for Research Development. 8-K 1/25/2024 10.4 10.24+ License Agreement, effective as of March 8, 2018, by and between Lung Therapeutics, Inc. and Vivarta Therapeutics, L.L.C. 8-K 1/25/2024 10.5 10.25* Lung Therapeutics, Inc.2013 Long-Term Incentive Plan, as amended 10-K 4/15/2024 10.42 19.1* Rein Insider Trading Policy X 21.1 Subsidiaries of Rein Therapeutics, Inc. 10-K 4/15/2024 21.1 23.1 Consent of CBIZ CPAs PC, independent registered public accounting firm X 23.2 Consent of Marcum LLP, independent registered public accounting firm X 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 103 32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 97.1 Rein Therapeutics, Inc. Compensation Recovery Policy 10-K 4/15/2024 97.1 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Indicates management contract or compensatory plan. + In accordance with Item 601(b)(10)(iv) of Regulation S-K, certain information (indicated by “[**]”) has been excluded from this exhibit because it is both not material and private or confidential. A copy of the omitted portion will be furnished to the SEC upon request. ++ Confidential treatment has been requested and/or granted as to certain portions, which portions have been omitted and filed separately with the SEC. # Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC. ^ SEC File No. 333-218474 104 SIGNAT URES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . Rein Therapeutics, Inc. Date: March 26, 2026 By: /s/ Brian Windsor, Ph.D. Brian Windsor, Ph.D. President and Chief Executive Officer (principal executive officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Brian Windsor, Ph.D. President, Chief Executive Officer and Director (principal executive officer) March 26, 2026 Brian Windsor, Ph.D. /s/ Timothy M. Cunningham Interim Chief Financial Officer (principal financial officer and principal accounting officer) March 26, 2026 Timothy M. Cunningham /s/ Josef H. Von Rickenbach Chairman of the Board of Directors March 26, 2026 Josef H. Von Rickenbach /s/ Reinhard J. Ambros, Ph.D. Director March 26, 2026 Reinhard J. Ambros, Ph.D. /s/ William C. Fairey Director March 26, 2026 William C. Fairey /s/ Alan Musso Director March 26, 2026 Alan Musso 105 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID 199 ) F- 1 Report of Independent Registered Public Accounting Firm (PCAOB ID 688) F- 4 Consolidated Balance Sheets as of December 31, 2025 and 2024 F- 6 Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2025 and 2024 F- 7 Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity for the Years ended December 31, 2025 and 2024 F- 8 Consolidated Statements of Cash Flows for the Years ended December 31, 2025 and 2024 F- 9 Notes to Consolidated Financial Statements F- 10 106 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors of Rein Therapeutics Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Rein Therapeutics Inc. (the “Company”) as of December 31, 2025, the related consolidated statements of operations and comprehensive loss, changes in convertible preferred stock and stockholders’ equity and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. F- 1 Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Goodwill and Indefinite-Lived Intangible Assets Impairment Assessment Critical Audit Matter Description As described in Note 5 to the consolidated financial statements, the Company’s consolidated balances of Goodwill and In-process Research and Development (“IPR&D”) indefinite-lived intangible assets were $6.3 million and $13.5 million, respectively, as of December 31, 2025. The Company reviews goodwill for impairment at least annually or more frequently if events or circumstances indicate the carrying value at the reporting unit level might exceed its fair value. The IPR&D indefinite-lived intangibles are tested annually for impairment, or more frequently if events or circumstances indicate it is more likely than not the fair value is less than their carrying value. The Company estimated the fair value of its reporting unit using an income approach. The Company estimated the fair value of certain IPR&D assets using a multi period excess earnings model. The Company performed impairment analyses for IPR&D and Goodwill, which resulted in an impairment charge of $28.7 million relating to the IPR&D and no impairment relating to Goodwill. The principal consideration, for our determination that the evaluation of the fair values of the indefinite-lived intangible assets and the Company’s reporting unit, as a critical audit matter is the high degree of subjective auditor judgment associated with evaluating management’s determination of the fair values, which is primarily due to the complexity of the valuation models used and the sensitivity of the underlying significant assumptions. The key assumptions used in the determination of the fair value of the reporting unit include estimates of future cash flows and the discount rate applicable to those future cash flow periods. The key assumptions used in the determination of the fair value of certain IPR&D assets include estimates of future cash flows, the probability of success in various phases of its development programs, the discount rate applicable to those future cash flow periods, the tax rate and the timing of regulatory approval. Changes to these key assumptions could have a significant impact on the measurement of the fair value of the reporting unit and certain IPR&D. Auditing management’s valuation methods and these assumptions involve especially challenging and subjective auditor judgment due to the nature and extent of auditor effort required to address these matters, including the specialized knowledge and skill needed. How the Critical Audit Matter was Addressed in the Audit Our audit procedures related to the valuation of the fair values of goodwill and indefinite-lived intangible assets included the following, among others: • We evaluated the reasonableness of the valuation analysis from management and the third-party specialist engaged by management. • We assessed the qualifications and competence of management and the third-party specialist. F- 2 • We evaluated the methodologies used to determine the fair values of the indefinite-lived intangible assets and goodwill. • We tested the assumptions used to estimate the fair values, which included key assumptions such as the estimates of future cash flows, the probability of success in various phases of its development programs, the discount rate applicable to those future cash flow periods, the tax rate, and the timing of regulatory approval. • We assessed the reasonableness of management’s forecast of estimated future cash flows by inquiring with management to understand how the forecast was developed and comparing the projections to external sources including industry trends and data and peer companies’ historical data. • We involved our internal valuation specialist who assisted in (i) evaluating the reasonableness of valuation methods, (ii) testing the mathematical accuracy of the Company’s calculations, (iii) evaluating the reasonableness of the implied control premium; and (iv) evaluating the reasonableness of the significant assumptions to the models, including the discount rate applied to future cash flows. /s/ CBIZ CPAs P.C. CBIZ CPAs P.C. We have served as the Company’s auditor since 2024 (such date takes into account the acquisition of the attest business of Marcum llp by CBIZ CPAs P.C. effective November 1, 2024). New York, NY March 26, 2026 F- 3 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Rein Therapeutics Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Rein Therapeutics Inc. (the “Company”) as of December 31, 2024, the related consolidated statements of operations and comprehensive loss, changes in convertible preferred stock and stockholders’ equity and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has incurred significant losses and expects to continue to incur operating losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. F- 4 /s/ Marcum llp Marcum LLP We have served as the Company’s auditor from 2024 to 2025. New York, NY April 7, 2025 F- 5 R EIN THERAPEUTICS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) December 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 3,215 $ 12,865 Prepaid expenses and other current assets 1,111 792 Total current assets 4,326 13,657 Property and equipment, net — 1 Goodwill 6,330 6,330 Intangible assets 13,500 42,200 Other non-current assets 2 2 Total assets $ 24,158 $ 62,190 Liabilities, Convertible Preferred Stock and Stockholders’ Equity Current liabilities: Accounts payable $ 3,976 $ 911 Accrued expenses and other current liabilities 2,204 4,838 Total current liabilities 6,180 5,749 Deferred tax liability 1,060 1,772 Other long-term liability — 277 Total liabilities 7,240 7,798 Commitments and contingencies (Note 12) Convertible preferred stock, $ 0.001 par value, 5,000,000 shares authorized at December 31, 2025 and at December 31, 2024; 24,610 shares issued and 12,232 shares outstanding at December 31, 2025 and at December 31, 2024 45,005 45,005 Stockholders’ equity: Common stock, $ 0.001 par value; 100,000,000 shares authorized at December 31, 2025 and at December 31, 2024; 27,550,222 shares and 21,666,012 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively 113 108 Additional paid-in capital 373,133 360,697 Accumulated other comprehensive loss ( 62 ) ( 18 ) Accumulated deficit ( 401,271 ) ( 351,400 ) Total liabilities, convertible preferred stock and stockholders’ equity $ 24,158 $ 62,190 The accompanying notes are an integral part of these consolidated financial statements. F- 6 REIN THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except share and per share data) Year Ended December 31, 2025 2024 Revenue $ — $ — Operating expenses: Research and development 11,029 14,248 General and administrative 10,902 13,864 Impairment loss on intangible assets 28,700 37,000 Total operating expenses 50,631 65,112 Loss from operations ( 50,631 ) ( 65,112 ) Other income, net 48 685 Income tax benefit 712 1,544 Net loss $ ( 49,871 ) $ ( 62,883 ) Net loss per share—basic and diluted $ ( 1.96 ) $ ( 3.51 ) Weighted average common shares outstanding—basic and diluted 25,444,795 17,938,899 Comprehensive loss: Net loss $ ( 49,871 ) $ ( 62,883 ) Other comprehensive gain (loss): Unrealized (loss) gain on investments, net of tax of $ 0 ( 15 ) 45 Foreign currency translation adjustments ( 29 ) — Total other comprehensive (loss) gain ( 44 ) 45 Total comprehensive loss $ ( 49,915 ) $ ( 62,838 ) The accompanying notes are an integral part of these consolidated financial statements. F- 7 REIN THERAPEUTICS, INC. CONSOLIDATED STATEMENT OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS ’ EQUITY (In thousands, except share data) Series X Non-Voting Convertible Preferred Stock Common Stock Total Convertible Shares Amount Shares Amount Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Preferred Stock and Stockholders’ Equity Balances at December 31, 2023 24,610 $ 91,410 4,885,512 $ 91 $ 295,376 $( 63 ) $( 288,517 ) $ 98,297 Issuance of common stock in connection with conversion of Series X non-voting convertible preferred stock ( 12,378 ) ( 46,405 ) 12,378,000 12 46,392 — — ( 1 ) Issuance of common stock — — 4,273,505 4 10,933 — — 10,937 Issuance of warrants — — — — 7,225 — — 7,225 Issuance cost in connection with the Offering — — — — ( 488 ) — — ( 488 ) Stock-based compensation expense — — — — 1,117 — — 1,117 Exercises of stock options — — 128,995 1 142 — — 143 Unrealized gain on investments — — — — — 45 — 45 Net loss — — — — — — ( 62,883 ) ( 62,883 ) Balances at December 31, 2024 12,232 $ 45,005 21,666,012 $ 108 $ 360,697 $( 18 ) $( 351,400 ) $ 54,392 Issuance of common stock for Pre-Paid Advances — — 2,727,162 2 3,009 — — 3,011 Issuance of common stock for commitment fee — — 213,099 — 300 — — 300 Issuance of common stock in connection with “at the market” offerings — — 1,317,739 1 1,818 — — 1,819 Issuance of warrants — — — — 481 — — 481 Issuance of common stock in connection with Warrant Exercises — — 1,035,758 1 1,594 — — 1,595 Warrant Exchanges — — — — 2,984 — — 2,984 Stock-based compensation expense — — — — 2,224 — — 2,224 Exercises of stock options — — 10,452 — 4 — — 4 Vesting of restricted stock units — — 580,000 1 — — — 1 Common Stock to be issued upon Warrant Exercises — — — — 22 — — 22 Unrealized gain on investments — — — — — ( 15 ) — ( 15 ) Foreign currency translation adjustments — — — — — ( 29 ) — ( 29 ) Net loss — — — — — — ( 49,871 ) ( 49,871 ) Balance at December 31, 2025 12,232 $ 45,005 27,550,222 $ 113 $ 373,133 $( 62 ) $( 401,271 ) $ 16,918 The accompanying notes are an integral part of these consolidated financial statements. F- 8 REIN THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 49,871 ) $ ( 62,883 ) Adjustments to reconcile net loss to net cash used in operating activities: Commitment fee related to Pre-Paid Advance agreement 300 — Original issue discount related to Pre-Paid Advance agreement 150 — Depreciation and amortization expense 1 63 Stock-based compensation expense 2,224 1,117 Impairment loss on intangible assets 28,700 37,000 Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 319 ) 134 Other assets — 2,191 Accounts payable 3,065 ( 279 ) Operating lease liabilities — ( 48 ) Accrued expenses and other current liabilities ( 2,622 ) 1,691 Other long-term liabilities ( 277 ) 277 Deferred tax liabilities ( 712 ) ( 1,554 ) Net cash used in operating activities ( 19,361 ) ( 22,291 ) Cash flows from financing activities: Proceeds from issuance of common stock, net of offering costs 1,819 10,645 Proceeds from Pre-Paid Advances, net of discounts 2,850 — Proceeds from issuance of common stock in connection with stock option exercises 4 143 Proceeds from issuance of common stock in connection with Warrant Exercises, net of costs 1,595 — Proceeds from issuance of warrants, net of offering costs 481 7,030 Proceeds from Warrant Exchanges, net of offering costs 2,984 — Proceeds from warrant exercises with common stock subscribed 22 — Net cash provided by financing activities 9,755 17,818 Effect of exchange rate changes on cash and cash equivalents ( 44 ) — Net decrease in cash and cash equivalents ( 9,650 ) ( 4,473 ) Cash and cash equivalents at beginning of year 12,865 17,338 Cash and cash equivalents at end of year $ 3,215 $ 12,865 Cash and cash equivalents at end of year $ 3,215 $ 12,865 Cash and cash equivalents at end of year $ 3,215 $ 12,865 Supplemental disclosure of non-cash investing and financing activities: Unrealized (loss) gain on short-term investments $ ( 15 ) $ 37 Foreign currency translation adjustments $ ( 29 ) $ — Issuance of common stock for Pre-Paid Advances and interest accrual $ 3,011 $ — Conversion of Series X non-voting convertible preferred stock into common stock shares $ — $ 46,405 The accompanying notes are an integral part of these consolidated financial statements. F- 9 REIN THERAPEUTICS, INC. NOTES TO CONSOLIDATED FINANCIAL ST ATEMENTS (Amounts in thousands, except share and per share data) 1. Nature of the Business On January 10, 2025, Aileron Therapeutics, Inc., or Aileron, amended its Restated Certificate of Incorporation, as amended, to effect a change of the Company’s name from “Aileron Therapeutics, Inc.” to “Rein Therapeutics, Inc.”, or Rein, or the Company. Prior to the Lung Acquisition (as defined below), the Company was a clinical stage chemoprotection oncology company. The Company’s product candidate, ALRN-6924, was a MDM2/MDMX dual inhibitor that leverages its proprietary peptide drug technology. In February 2023, the Company decided to terminate further development of ALRN-6924. On October 31, 2024, the Company entered into an exclusive option agreement with Advancium Health Network, or Advancium, for the sale of ALRN-6924. In July 2025, the option agreement was terminated. 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. The Company is a clinical stage biopharmaceutical company focused on developing novel therapies for the treatment of fibrosis indications with no approved or limited effective treatments. The Company currently has one product candidate in clinical development, LTI-03. Development of another product candidate, LTI-01, as well as multiple candidates in preclinical development focused on fibrosis indications were postponed for an indefinite period due to insufficient financing as disclosed below. On October 31, 2023, the Company acquired Lung Therapeutics, Inc., or Lung Therapeutics or Lung, pursuant to an Agreement and Plan of Merger, dated October 31, 2023, or the Lung Acquisition Agreement, by and among the Company, AT Merger Sub I, Inc., a Delaware corporation and its wholly owned subsidiary, or the First Merger Sub, AT Merger Sub II, LLC, a Delaware limited liability company and its wholly owned subsidiary, or the Second Merger Sub, and Lung. Its principal offices are in Austin, Texas. Following the Lung Acquisition, the Company shifted its operating disease focus to advancing a pipeline of first-in-class medicines to address significant unmet medical needs in orphan pulmonary and fibrosis indications with the potential to greatly improve patient outcomes over currently available treatments. Following expiration of the lease on March 31, 2024, Rein currently operates and expects to operate virtually for the foreseeable future. The Company is subject to risks and uncertainties common to clinical-stage companies in the biotechnology industry, including, but not limited to the risk that the Company never achieves profitability, the need for substantial additional financing, the risk of relying on third parties, risks of clinical trial failures, dependence on key personnel, protection of proprietary technology, and compliance with government regulations. The Company’s lead product candidate, LTI-03, is being developed for the treatment of Idiopathic Pulmonary Fibrosis, or IPF, and has been evaluated in a healthy volunteer Phase 1a clinical trial and in a Phase 1b clinical trial in IPF patients. A Phase 2 multi-center, randomized, double-blind, and placebo-controlled study evaluating the safety, tolerability, and efficacy of LTI-03 in patients with IPF will enroll up to 120 IPF patients with interim topline data expected in the second half of 2026. The Company’s second product candidate, LTI-01, was in development for loculated pleural effusion, or LPE. The Company has completed Phase 1b and Phase 2a clinical trials in LPE patients. In June 2024, the Company decided to temporarily delay clinical development of LTI-01 in an effort to focus its resources on clinical development of LTI-03 and until additional funds are raised. In the fourth quarter of 2024, the Company determined that the temporary delay of further clinical development of LTI-01 may not be a short-term measure. In the fourth quarter of 2025, the Company decided to pause development activities related to LTI-01 for an indefinite period. The timing and likelihood of resuming development are uncertain and contingent on the Compamy’s ability to obtain additional financing and the future success of LTI-03. In May 2025, the Company 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. In addition, the trial is designed to assess the activity of inhaled dry powder LTI-03 across multiple biomarkers and to measure lung function, lung imaging markers of fibrosis, and the potential for healthy tissue regeneration. The trial is designed to enroll approximately 120 patients diagnosed with IPF within 5 years of screening, who may be receiving standard of care antifibrotic therapy, across up to 50 sites globally, including sites in the U.S., UK, Germany, Australia and Poland. Patients will be randomized into two blinded placebo-controlled cohorts that will run concurrently. Patients in the low dose cohort will receive 2.5 mg F- 10 of either LTI-03 or placebo administered twice daily, or BID, for a total dose of 5 mg/day, while participants in the high dose cohort will receive 5 mg BID for a total dose of 10 mg/day. The primary endpoint is the incidence of treatment-emergent adverse events from Day 1 through Week 24. The key secondary endpoint is the efficacy of LTI-03 measured through forced vital capacity, percent predicted FVC and high-resolution computer tomography, in collaboration with Qureight Ltd. 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. In October 2025, the Company received authorization from the European Medicines Agency, or the EMA, to initiate its Phase 2 RENEW trial of its lead candidate, LTI-03, for the treatment of IPF at sites in Germany and Poland. The Company had previously received regulatory clearance from the UK’s Medicines and Healthcare products Regulatory Agency, or the MHRA. In January 2026, the Company received orphan drug designation from the EMA for LTI-03. As of the date of this Annual Report, the Company activated sites and is enrolling patients in the U.S. and is seeking to activate additional sites, enroll patients and initiate the RENEW trial throughout the U.S., UK, Europe and other jurisdictions. In March 2026, the Company dosed its first patient in the RENEW Phase 2 clinical trial of LTI-03. The Company expects to report initial interim topline data on some proportion of patients in the fourth quarter of 2026. Liquidity and Going Concern In accordance with Accounting Standards Update, or ASU, No. 2014-15, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) , the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying consolidated financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the consolidated financial statements are issued. When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the consolidated financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Generally, to be considered probable of being effectively implemented, the plans must have been approved before the date that the consolidated financial statements are issued. The Company’s consolidated financial statements have been prepared assuming that the Company will continue to operate as a going concern, which contemplates the continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. Through December 31, 2025, the Company has financed its operations primarily through $ 145,467 in net proceeds from sales of common stock and warrants, $ 2,201 in net proceeds from sales of common stock under its “at the market” offering programs, $ 131,211 from sales of preferred stock prior to its initial public offering, or IPO, $ 34,910 from a collaboration agreement in 2010, $ 17,536 in net proceeds in connection with a private placement following the Lung Acquisition in 2023, $ 17,675 in net proceeds in connection with an underwritten offering of the Company's common stock and accompanying warrants to purchase common stock in May 2024, $ 5,082 in net proceeds from the April 2025 Transactions (as defined below) an d $ 2,850 in net proceeds from the Yorkville Transactions described below. As of December 31, 2025, the Company had $ 3,215 in cash and cash equivalents. In May 2024, the Company completed an underwritten follow-on public offering, or the Offering, pursuant to which the Company issued and sold 4,273,505 shares of the Company’s common stock, par value $ 0.001 per share, 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. All of the Offering Shares and Offering Warrants were sold by the Company. 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 from the Company, after the underwriting discount, at a combined price of $ 4.35 . Net proceeds from the Offering were $ 17,675 , after deducting underwriting discounts and commissions and offering expenses, and excluding any proceeds that may be received from exercise of the Offering Warrants. The Offering Warrants to purchase 890,138 shares of common stock were exercised in April 2025 as part of April 2025 Transactions (as defined below). As of December 31, 2025, Offering Warrants to purchase 3,388,707 shares of common stock remained outstanding. F- 11 In April 2025, the Company entered into privately negotiated letter agreements with certain holders of the PIPE Warrants, as described in Note 3, and certain holders of the Offering Warrants, who agreed to exercise for cash the PIPE Warrants and the Offering Warrants, or the Warrant Exercises as further discussed in Note 8. The total gross proceeds for the Warrant Exercises were $ 1,679 . Also in April 2025, the Company 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, surrendered PIPE Warrants to the Company for cancellation and made an aggregate cash payment into which the Exchange Pre-Funded Warrants are exercisable, or the Warrant Exchanges as further discussed in Note 8. The total gross proceeds for the Warrant Exchanges were $ 3,101 . In addition, an entity affiliated with Bios Partners, or the Bios Purchaser, purchased additional pre-funded warrants in a private placement, or the Placement Pre-Funded Warrants, pursuant to a subscription agreement underlying the Placement Pre-Funded Warrants, or the Private Placement. Total gross proceeds for the Private Placement were $ 500 . The Warrant Exercises, Warrant Exchanges and Private Placement are collectively referred to as the April 2025 Transactions. On May 15, 2025, the Company entered into an “at the market offering” agreement, or the Wainwright Sales Agreement, with H.C. Wainwright & Co., LLC, or H.C. Wainwright, as agent and/or principal, pursuant to which the Company could offer and sell shares of its common stock having an aggregate offering price of up to $ 13,702 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. As of December 31, 2025, the Company had issued and sold 999,967 shares of common st ock pursuant to the Wainwright Sales Agreement for total net proceeds of $ 1,489 , after deducting transaction fees of $ 52 paid by the Company . In July 2025, in connection with the Yorkville Transactions, the Company reduced the aggregat e offering price of the shares of common stock that could be offered and sold under the Wainwright Sales Agreement to $ 8,067 . Prior to entering into the Wainwright Sales Agreement, in May 2025, the Company 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 the Company could offer and sell up to $ 50,000 of shares of its common stock from time to time through or to Citizens JMP by any method that was deemed an “at the market” offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. In January 2025, the Company issued and sold 317,772 shares of common stock pursuant to the Equity Distribution Agreement for total net proceeds of $ 712 , after deducting transaction fees of $ 22 paid by the Company. The Company did no t issue or sell any other shares of common stock pursuant to the Equity Distribution Agreement during the year ended December 31, 2025. The Company did no t sell any shares of common stock pursuant to the Equity Distribution Agreement during the year ended December 31, 2024. In July 2025, the Company entered into a Pre-Paid Advance Agreement, or the PPA, an d 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. In accordance with the terms of the PPA, the Company may request pre-paid advances of up to $ 6,000 from Yorkville (each, a “Pre-Paid Advance”) 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. At any time there is an outstanding balance under any Pre-Paid Advances, Yorkville may provide written notice requiring the Company to issue and sell shares of its common stock to Yorkville, which shall be offset against and reduce the amounts outstanding under the Pre‑Paid Advances. An initial Pre-Paid Advance of $ 1,000 was purchased on July 29, 2025 by Yorkville, or the First Advance, for net proceeds of $ 950 . O n September 8, 2025, Yorkville purchased a second Pre-Paid Advance, or the Second Advance, of $ 1,000 , for which the Company received net proceeds of $ 950 . On October 23, 2025, Yorkville purchased a third Pre-Paid Advance, or the Third Advance, of $ 1,000 , for which the Company received net proceeds of $ 950 . As of December 31, 2025, Yorkville has converted the entire initial Pre‑Paid Advance, in the aggregate amount of $ 1,007 of principal and accrued interest, into 953,765 shares of the Company’s common stock, at a weighted average price per share of approximately $ 1.056 , converted the Second Advance, in the aggregate amount of $ 1,004 of principal and accrued interest, into 927,107 shares of the Company’s common stock, at a weighted average price per share of approximately $ 1.082 , and converted the Third Advance, in the aggregate amount of $ 1,001 of principal and accrued interest, into 846,290 shares of the Company’s common stock, at a weighted average price per share of approximately $ 1.183 . Separately, under the SEPA, the Company may sell up to $ 15,000 of its common stock to Yorkville over a 36-month term. The Company has the sole discretion to initiate such sales, subject to volume and pricing limitations. In connection with entry into the SEPA, the Company paid Yorkville a $ 300 commitment fee through the issuance of 213,099 shares of common stock and paid $ 25 in structuring and legal fees. As of the date of this report, the Company has not elected to sell any shares of common stock to Yorkville under the SEPA. In December 2025, the Company elected to terminate the PPA and SEPA. F- 12 Management believes that, based on the Company’s current operating plan, the Company’s cash and cash equivalents of $ 3,215 as of December 31, 2025, together with the proceeds received by the Company pursuant to the securities purchase agreements it entered into in January 2026 and February 2026, will be sufficient to enable the Company to fund its planned operating expense and capital expenditure requirements into the second quarter of 2026. The funds are not sufficient to enable the Company to complete the Phase 2 RENEW clinical trial of LTI-03. The Company’s estimate as to how long it expects its existing cash and cash equivalents to be able to continue to fund its operations is based on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than it currently expects. In addition, the Company’s cash and cash equivalents will not be sufficient to enable the Company to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of these consolidated financial statements, which raises substantial doubt about the Company’s ability to continue as a going concern. Since its inception, the Company has not generated any revenue from product sales and has never generated an operating profit. The Company has incurred significant losses on an aggregate basis. The Company’s net losses were $ 49,871 and $ 62,883 for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the Company had an accumulated deficit of $ 401,271 . 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 the Company’s operations. The Company expects to continue to incur operating losses for the foreseeable future. The Company expects to finance its operations primarily through utilization of its current financial resources and through the sale of additional equity or debt financings, collaborations, licensing arrangements or other sources. The Company plans to seek to raise additional funds through equity or debt financings, strategic collaborations, licensing arrangements or other sources. However, there is no assurance that such funding will be available to the Company, will be obtained on terms favorable to the Company or will provide the Company with sufficient funds to meet its objectives. The Company’s funding estimates are based on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than it currently expects. If additional funds are not available, the Company could be forced to delay, reduce or eliminate its research and development programs or future commercialization efforts and its business could be materially harmed. The Company’s future viability is dependent on its ability to raise additional capital, enter into a financing, consummate a successful acquisition, merger, business combination, or sale of assets or other transaction. If the Company becomes unable to continue as a going concern, it may have to liquidate its assets and the values it receives for its assets in liquidation or dissolution could be significantly lower than the values reflected in its consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and as amended by ASUs of the Financial Accounting Standards Board, or FASB. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Lung Therapeutics, LLC, Lung Therapeutics Australia Pty Ltd, and Lung Therapeutics Limited. Lung Therapeutics Limited is currently inactive. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual for research and development expenses, the prepaid research and development expenses, valuation of intangibles and goodwill, the valuation of warrants, and the value of stock-based F- 13 compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. Foreign Currency Transactions The functional currency for the Company’s wholly owned foreign subsidiary, Lung Therapeutics Australia Pty Ltd., is the United States dollar. All foreign currency transaction gains and losses are recognized in the consolidated statements of operations and comprehensive loss. Concentration of Credit Risk and of Significant Suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Periodically, the Company maintains balances in operating accounts above federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents. The Company is dependent on third-party manufacturers to supply products for research and development activities of its programs, including preclinical and clinical testing. In particular, the Company relied on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs. These programs could have been adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs. Cash and Cash Equivalents The Company maintains cash balances in various accounts, including those insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC provides insurance coverage up to applicable limits for deposits held in participating financial institutions. At various times, the Company has deposits in these financial institutions in excess of the amount insured by the FDIC. The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at the acquisition date to be cash equivalents. The Company’s cash equivalents are comprised of funds held in money market accounts and treasury bills account and are measured at fair value on a recurring basis. Fair Value Measurements Certain assets and liabilities are carried at fair value under GAAP. ASC 820, Fair Value Measurement , or ASC 820, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable. • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. F- 14 The Company’s cash equivalents are carried at fair value, determined according to the fair value hierarchy described above (see Note 3). The carrying values of the Company’s accounts payable and accrued expenses approximate their fair value due to the short-term nature of these liabilities. Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. The Company's indefinite-lived intangible assets, which consist of in-process research and development, or IPR&D, acquired in the Lung Acquisition were recorded at fair value on their acquisition date. Goodwill and indefinite-lived intangible assets are not amortized but are subject to impairment testing on an annual basis as of December 31 or more frequently if events or circumstances indicate a potential impairment. The Company accounts for goodwill and indefinite-lived intangible assets in accordance with ASC 350, Intangibles Goodwill and Other , and ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The Company’s goodwill and intangible assets are not deductible for tax purposes. Impairment of Long-Lived Assets Long-lived assets consist of property and equipment, goodwill and intangible assets. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows. In performing the Company’s annual goodwill impairment test, the Company is permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of the Company’s reporting unit exceeds its carrying amount, including goodwill. In performing the qualitative assessment, the Company considers certain events and circumstances specific to the reporting unit and to the entity as a whole, such as macroeconomic conditions, industry and market considerations, overall financial performance and cost factors when evaluating whether it is more likely than not that the fair value of the reporting unit exceeds its carrying amount. The Company is also permitted to bypass the qualitative assessment and proceed directly to the quantitative assessment. If the Company chooses to undertake the qualitative assessment and concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company would then proceed to the quantitative impairment assessment. In the quantitative assessment, the Company compares the fair value of the reporting unit to its carrying amount, which includes goodwill. If the fair value exceeds the carrying value, no impairment loss exists. If the fair value is less than the carrying amount, a goodwill impairment loss is measured and recorded. In the fourth quarter of 2025, the Company recorded an impairment loss on intangible assets of $ 28,700 . For additional details regarding goodwill and intangible assets, refer to Note 5. Series X Convertible Preferred Stock The Company has classified its Series X convertible preferred stock, referred to as Series X Preferred Stock, as temporary equity in the accompanying consolidated balance sheets due to terms that allow for redemption of the shares in cash upon certain change in control events that are outside of the Company’s control, including sale or transfer of control of the Company as holders of the Series X Preferred Stock could cause redemption of the shares in these situations. The Company did not accrete the carrying values of the preferred stock to the redemption values since a liquidation event was not considered probable as of December 31, 2025 or December 31, 2024. Subsequent adjustments of the carrying values to the ultimate redemption values will be made only when it becomes probable that such a liquidation event will occur . F- 15 Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including stock-based compensation and benefits, facilities costs, costs of clinical trials, sponsored research, manufacturing, and external costs of outside vendors engaged to conduct preclinical development activities and trials. Costs incurred in obtaining technology licenses are immediately recognized as research and development expense if the technology licensed has not reached technological feasibility and has no alternative future uses. The Company has entered into various research and development and other agreements with commercial firms, researchers, universities, and others for provisions of goods and services. These agreements are generally cancelable, and the related costs are recorded as research and development expenses as incurred. Research and development expenses include costs for salaries, employee benefits, subcontractors, facility-related expenses, depreciation and amortization, stock-based compensation, laboratory supplies, and external costs of outside vendors engaged to conduct discovery, preclinical and clinical development activities, and clinical trials as well as to manufacture clinical trial materials, and other costs. The Company records accruals for estimated ongoing research and development costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company’s estimates. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such prepaid expenses are recognized as an expense when the goods have been delivered or the related services have been performed, or when it is no longer expected that the goods will be delivered, or the services rendered. Upfront payments, milestone payments and annual maintenance fees under license agreements are expensed in the period in which they are incurred in the consolidated statements of operations and comprehensive loss. Patent Costs All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses. Accounting for Stock-Based Compensation The Company measures all stock options and other stock-based awards granted to employees, directors and non-employee consultants based on the fair value on the date of the grant and recognizes compensation expense of those awards, net of forfeitures, over the requisite service period, which is generally the vesting period of the respective award. The Company applies the straight-line method of expense recognition to all awards with only service-based vesting conditions and applies the graded vesting method to all awards with performance-based vesting conditions or both service-based and performance-based vesting conditions. The Company recognizes compensation expense for only the portion of awards that are expected to vest. The Company accounts for forfeitures as they occur. For performance-based awards, the Company does not recognize expense until the underlying vesting conditions are deemed to be probable of occurrence. The Company classifies share-based compensation expenses in its consolidated statement of operations and comprehensive loss in the same manner in which the award recipient's payroll costs are classified or in which the award recipient's service payments are classified, either to general and administrative expenses or research and development expenses. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company estimates its expected stock volatility using a combination of its own historical stock price volatility and the historical volatilities of a group of peer companies in its industry with similar market characteristics. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods F- 16 approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The quoted market price of the Company’s common stock is used to estimate the fair value of the stock-based awards at grant date. Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or in the Company’s tax returns. Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Changes in valuation allowances from period to period are included in the Company’s tax provision in the period of change. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes recognized in the financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. Inflation Reduction Act of 2022 On August 16, 2022, the Inflation Reduction Act of 2022, or IR Act, was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1 % excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1 % of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury, or Treasury, has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any redemption or other repurchase that occurs after December 31, 2022, in connection with a business combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a business combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the business combination, extension or otherwise, (ii) the structure of a business combination, (iii) the nature and amount of any private investment in public equity, or the PIPE, or other equity issuances in connection with a business combination (or otherwise issued not in connection with a business combination but issued within the same taxable year of a business combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a business combination and in the Company’s ability to complete a business combination. Segment reporting F- 17 Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or CODM, in deciding how to allocate resources and in assessing performance. The Company’s CODM is its Chief Executive Officer , or CEO. The Company operates and manages its business as a single operating and reportable segment on a consolidated basis, which is consistent with how its CODM reviews financial performance and allocates resources. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. The Company’s other comprehensive loss in all periods presented includes unrealized gains (losses) on available-for-sale investments and foreign currency translation adjustments. Net Loss per Share Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss attributable to common stockholders is computed by adjusting loss per share attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares. For purpose of this calculation, Series X non-voting convertible preferred stock, outstanding options and warrants to purchase common stock are considered potentially dilutive securities. Recently Adopted Accounting Pronouncements In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments , to improve relevance and consistency in application of the induced conversion guidance in Subtopic 470-20. The ASU 2024-04 is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of the annual reporting period for all entities that have adopted the amendments in ASU 2020-06, Debt—Debt with Conversion and Other Options and Derivatives and Hedging—Contracts in Entity's Own Equity: Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures. In March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements , that contains amendments to the Codification that remove references to various FASB Concepts Statements. This effort facilitates Codification updates for technical corrections such as conforming amendments, clarifications to guidance, simplifications to wording or the structure of guidance, and other minor improvements. Adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In March 2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards , to improve GAAP by adding an illustrative example that includes four fact patterns to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether a profits interest award should be accounted for in accordance with Topic 718, Compensation—Stock Compensation . For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024. Adoption of this guidance did no t have a material impact on the Company’s consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , to enhance the transparency and decision usefulness of income tax disclosures by requiring disaggregated information about an entity’s effective tax rate reconciliation, as well as information on taxes paid. This ASU is effective for annual periods beginning after December 15, 2024 . The Company has adopted this ASU prospectively for the year ended December 31, 2025 and prepared the required disclosures, refer to Note 14. F- 18 In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Segment Disclosures , to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. On January 1, 2023 , the Company adopted this ASU. The Company has evaluated the impact of the new requirements and prepared the required disclosures. Refer to Note 2 for the Company's segment reporting accounting policy and Note 13 for a summary of the segment loss, including significant segment expenses. Accounting Pronouncements Not Yet Adopted In December 2025, the FASB issued ASU 2025-12, Codification Improvements . The amendments include technical corrections, clarifications, and minor improvements to various Topics within the FASB ASC. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted. Adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements . The amendments clarify the application of interim reporting guidance, including when Topic 270 applies, and improve the consistency and usefulness of interim disclosures. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities and for interim reporting periods within annual reporting periods beginning after December 15, 2028, for entities other than public business entities. Early adoption is permitted for all entities. The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date , to clarify the effective date of ASU 2024-03, Income Statement—Reporting Comprehensive Income: Disaggregation of Income Statement Expenses. FASB clarified that all public business entities should initially adopt the disclosure requirements in the ASU 2024-03 in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses , to enhance the transparency and decision usefulness of financial information presented in the income statement by requiring disaggregated information about certain income statement expense line items. The amendments apply to all public business entities. This ASU is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is currently assessing the effect of this ASU on its consolidated financial statements and related disclosures. 3 . Fair Value of Financial Assets The following tables present information about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values: December 31, 2025 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 3,130 $ — $ — $ 3,130 Treasury bills 4 — — 4 $ 3,134 $ — $ — $ 3,134 December 31, 2024 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 2,539 $ — $ — $ 2,539 Treasury bills 8,341 — — 8,341 $ 10,880 $ — $ — $ 10,880 F- 19 During the years ended December 31, 2025 and 2024, there were no transfers between levels. 4. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following: December 31, 2025 December 31, 2024 Prepaid research and development $ 230 $ 116 Other current assets 881 676 Total prepaid expenses and other current assets $ 1,111 $ 792 5. Goodwill and Indefinite-Lived Intangible Assets Indefinite-lived intangible assets and goodwill are tested for impairment at least annually. The assessment of recoverability and impairment was performed at the individual indefinite-lived intangible asset level. The Company incurred impairment loss on indefinite-lived intangible assets of $ 28,700 and $ 37,000 for the years ended December 31, 2025 and 2024, respectively, in connection with funding constraints that are causing the delay in further clinical development of LTI-01 and other preclinical programs until additional funds are raised. In the fourth quarter of 2025, the Company decided to pause development activities related to LTI-01 for an indefinite period and focus on the development of LTI-03. The timing and likelihood of resuming development of LTI-01 are uncertain and contingent on the Company's ability to obtain additional financing and the future success of LTI-03. Therefore, the Company wrote off the total carrying value of the LTI-01 asset and other preclinical programs as of December 31, 2025, which resulted in an impairment loss of $ 28,700 for the year ended December 31, 2025. This impairment charge is classified within impairment loss on intangible assets in the consolidated statements of operations and comprehensive loss. The fair value of intangible assets was determined using multi-period excess earning method and using Level 3 inputs, which included estimates of forecasted cash flows for each candidate. There was no impairment loss recognized for the LTI-03 asset during the year ended December 31, 2025 . The Company performed an impairment assessment of its goodwill, both qualitatively and quantitatively, and concluded that the fair value of goodwill exceeds its carrying value, therefore no goodwill impairment was recognized as of December 31, 2025. The fair value of reporting unit was determined using the income approach with a reconciliation to market capitalization. Goodwill and indefinite-lived intangible assets consisted of the following: December 31, 2025 December 31, 2024 Goodwill $ 6,330 $ 6,330 Indefinite-lived intangible assets 13,500 42,200 $ 19,830 $ 48,530 6. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: December 31, 2025 December 31, 2024 External research and development services $ 765 $ 2,720 Payroll and payroll-related costs 940 1,474 Professional fees 401 522 Other 98 122 Total accrued expenses and other current liabilities $ 2,204 $ 4,838 F- 20 7 . Preferred Stock The Company is authorized to issue 5,000,000 shares of preferred stock, par value $ 0.001 per share. As of December 31, 2025 and December 31, 2024, the Company had issued 24,610 shares of Series X Preferred Stock, of which 12,232 shares of Series X Preferred Stock remained outstanding At the 2023 annual meeting of stockholders, or the 2023Annual Meeting, the Company’s stockholders approved the issuance, in accordance with Nasdaq Listing Rule 5635(a), of shares of common stock, upon conversion of the Company’s outstanding Series X Preferred Stock. On March 5, 2024, based upon then existing beneficial ownership limitations, 11,957 shares of Series X Preferred Stock were automatically converted into 11,957,000 shares of common stock. On May 8, 2024, the Bios Entities (as defined below) provided notice to the Company and converted 421 shares of Series X Preferred Stock held by them into 421,000 shares of common stock. As of December 31, 2025 and December 31, 2024, 12,232 shares of Series X Preferred Stock (which are convertible into 12,232,000 shares of common stock) remained convertible at the option of the holder thereof, subject to certain beneficial ownership limitations (as described below). The Company evaluated the Series X Preferred Stock for liability classification in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity , or ASC 480, and determined that equity treatment was appropriate because the Series X Preferred Stock did not meet the definition of the liability instruments. Specifically, the Series X Preferred Stock is not mandatorily redeemable and does not embody an obligation to buy back the shares outside of the Company’s control in a manner that could require the transfer of assets. The Company determined that the Series X Preferred Stock would be recorded as temporary equity, based on the guidance of ASC 480, given that it is contingently redeemable. Each share of Series X Preferred Stock is convertible into 1,000 shares of Common Stock. The preferences, rights, and limitations initially applicable to the Series X Preferred Stock are set forth in the Certificate of Designation of Series X Non-Voting Convertible Preferred Stock, or the Certificate of Designation. The Series X Preferred Stock has the following characteristics: Voting Except as otherwise required by law, the Series X Preferred Stock does not have voting rights. However, as long as any shares of Series X Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series X Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the Series X Preferred Stock or alter or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, the Certificate of Incorporation or by-laws of the Company, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series X Preferred Stock, (ii) issue further shares of Series X Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series X Preferred Stock, or (iii) enter into any agreement with respect to any of the foregoing. Dividends Holders of Series X Preferred Stock are entitled to receive dividends on shares of Series X Preferred Stock equal, on an as-if-converted-to-common-stock basis, and in the same form as dividends actually paid on shares of the common stock. Such dividends are not cumulative. Since the Company’s inception, no dividends have been declared or paid. Liquidation, dissolution or winding up The Series X Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company. Upon liquidation, dissolution or winding up of the Company, the Series X preferred stockholders shall be entitled to receive an equivalent amount of distributions as would be paid on the common stock underlying the Series X Preferred Stock, determined on an as-converted basis, pari passu with any distributions to the common stock shareholders. F- 21 Conversion The Series X Preferred Stock is convertible into common stock at a rate of 1,000 shares of common stock for every one share of Series X Preferred Stock that is converted. The Series X Preferred Stock is subject to certain beneficial ownership limitations, including that a holder of Series X Preferred Stock is prohibited from converting shares of Series X Preferred Stock into shares of common stock if, as a result of such conversion, such holder (together with its affiliates and any other persons acting as a group together with the holder or any of its affiliates) would beneficially own more than a specified percentage (to be initially set at 19.99 % and thereafter adjusted by the holder to a number not to exceed 19.99 %) of the total number of shares of common stock issued and outstanding immediately after giving effect to such conversion. Redemption Shares of the Series X Preferred Stock are not redeemable at the election of the holder. Maturity The Series X Preferred Stock shall be perpetual unless converted. 8. Common Stock As of December 31, 2025 and December 31, 2024, the Company was authorized to issue 100,000,000 shares of common stock, par value $ 0.001 per share. As of December 31, 2025 and December 31, 2024, the Company had 27,550,222 and 21,666,012 shares of common stock issued and outstanding, respectively. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the Company’s Board, if any. As of December 31, 2025 and 2024, no dividends had been declared. In the event of liquidation or dissolution, the holders of the common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Issuance of Common Stock and Warrants Wainwright Sales Agreement On May 15, 2025, the Company entered into the Wainwright Sales Agreement with H.C. Wainwright, as agent and/or principal, pursuant to which the Company could offer and sell shares of its common stock having an aggregate offering price of up to $ 13,702 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. As of December 31, 2025, the Company had issued and sold 999,967 shares of common stock pursuant to the Wainwright Sales Agreement for total net proceeds of $ 1,489 , after deducting transaction fees of $ 52 paid by the Company. In July 2025, in connection with the Yorkville Transactions, the Company reduced the aggregate offering price of the shares of common stock that could be offered and sold under the Wainwright Sales Agreement to $ 8,067 . Prior to entering into the Wainwright Sales Agreement, in May 2025, the Company terminated its “at the market offering” pursuant to the Equity Distribution Agreement with Citizens JMP. Through May 2025, the Company issued and sold 317,772 shares of common stock pursuant to the Equity Distribution Agreement for total net proceeds of $ 712 , after deducting transaction fees of $ 22 paid by the Company. The Company did not issue or sell any other shares of common stock pursuant to the Equity Distribution Agreement during the year ended December 31, 2025. The Company did not sell any shares of common stock pursuant to the Equity Distribution Agreement during the year ended December 31, 2024. Warrant Exercises and Exchanges F- 22 On April 21, 2025, the Company entered into privately negotiated letter agreements with certain holders of its outstanding warrants issued on November 2, 2023, or the PIPE Warrants, and May 1, 2024, or the Offering Warrants. Pursuant to these agreements, certain holders agreed to exercise the PIPE Warrants for an aggregate of 159,500 shares of the Company’s common stock and the Offering Warrants for an aggregate of 890,138 shares of common stock, at a reduced exercise price of $ 1.60 per share. The original exercise prices were $ 4.89 per share for the PIPE Warrants and $ 4.68 per share for the Offering Warrants. The exercise of the PIPE Warrants was completed on April 24, 2025, and the exercise of the Offering Warrants was completed in May 2025 (collectively, the “Warrant Exercises”). The Company received total net proceeds of $ 1,595 from the Warrant Exercises. Separately, in April 2025, the Company entered into agreements with additional holders of the PIPE Warrants who agreed to surrender warrants representing an aggregate of 1,939,000 shares of common stock for cancellation. In exchange, these holders received pre-funded warrants (the “Exchange Pre-Funded Warrants”) exercisable for the same number of shares at an exercise price of $ 0.001 per share and paid $ 1.599 per share in cash by April 24, 2025 (the “Warrant Exchanges”). The Company received total net proceeds of $ 2,984 from the Warrant Exchanges. As part of the Warrant Exchanges, entities affiliated with Bios Equity Partners, LP (“Bios Partners”) surrendered PIPE Warrants representing an aggregate of 1,300,500 shares and provided the associated cash consideration of $ 2,079 for the issuance of Exchange Pre-Funded Warrants. In addition, on April 21, 2025, an entity affiliated with Bios Partners agreed to purchase additional pre-funded warrants to acquire 312,695 shares of the Company’s common stock in a private placement at a price of $ 1.599 per share, resulting in total net proceeds of $ 481 (the “Bios Pre-Funded Warrants”). The Exchange Pre-Funded Warrants and the Bios Pre-Funded Warrants are collectively referred to as the “Pre-Funded Warrants.” The Company assessed the Pre-Funded Warrants for appropriate classification under U.S. GAAP and determined that they are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to ASC 815, Derivatives and Hedging . The Pre-Funded Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the Pre-Funded Warrants are classified as equity and accounted for as a component of additional paid-in capital at the time of issuance. The Pre-Funded Warrants were initially recognized at their fair value, calculated as the fair value of the underlying common stock less the exercise price of $ 0.001 per share. The fair value of the common stock was determined based on the quoted market price of the Company’s common stock as of the issuance date. The Pre-Funded Warrants will not be remeasured subsequent to initial recognition. The repricing of the PIPE Warrants and the Offering Warrants and issuance of the Exchange Pre-Funded Warrants is considered a modification under the guidance of ASU 2021-04. The modification is consistent with the “Equity Issuance” classification under that guidance as the reason for the modification was to induce the holder to cash exercise their warrants, resulting in the imminent exercise of the PIPE Warrants and the Offering Warrants, which raised equity capital and generated net proceeds for the Company of approximately $ 4,601 . The total fair value of the consideration of the modification includes the incremental fair value of the PIPE Warrants and the Offering Warrants (determined by comparing the fair values immediately prior to and immediately after the modification) and the initial fair value of the PIPE Warrants and the Offering Warrants. The fair values of the PIPE Warrants and the Offering Warrants were calculated using the Black-Scholes model. The Company determined that the total fair value of the consideration related to the modification of PIPE Warrants and the Offering Warrants, including the initial fair value of the Exchange Pre-Funded Warrants was $ 4,757 . The net effect of the modification in the amount of $ 490 , as well as the value of the replaced PIPE warrants of $ 1,385 and the fair value of the Exchange Pre-Funded Warrants of $ 5,652 were recorded in additional paid-in capital, as both the original warrants (the PIPE Warrants and the Offering Warrants) and the replacement instruments (the Exchange Pre-Funded Warrants) are equity-classified. The Offering Warrants In May 2024, the Company completed the Offering pursuant to which the Company issued and sold 4,273,505 shares of the Company’s common stock and accompanying the Offering Warrants to purchase 4,273,505 shares of common stock. All of the Offering Shares and the Offering Warrants were sold by the Company. 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 and accompanying Offering Warrant from the Company, after the underwriting discount, at a combined price of $ 4.35 . Net proceeds from the Offering were approximately $ 17,675 , F- 23 after deducting underwriting discounts and commissions and offering expenses, and excluding any proceeds that may be received from exercise of the Offering Warrants. The Offering closed on May 3, 2024. 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 Offering Warrant Shares. The Offering Warrants include certain rights upon “fundamental transactions” as described in the Offering Warrants, including the right of the holders thereof to receive from the Company or a successor entity the same type or form of consideration (and in the same proportion) that is being offered and paid to the holders of common stock in such fundamental transaction (as described in such Offering Warrants) of the unexercised portion of the applicable Warrants immediately prior to such fundamental transaction. A holder of Offering Warrants (together with its affiliates) may not exercise any portion of an Offering Warrant to the extent that the holder would beneficially own more than 4.99 % (or, at the election of the holder, 9.99 %) of the Company’s outstanding common stock immediately after exercise. The Company had assessed the Offering Warrants for appropriate equity or liability classification and determined the Offering Warrants are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to ASC 815. The Offering Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the Offering Warrants are classified as equity and accounted for as a component of additional paid-in capital at the time of issuance. The Offering Warrants were initially recognized at their relative fair value in the amount of $ 8.0 million at the time of issuance determined using Black-Scholes option-pricing model and will not be remeasured. The following assumptions were used to perform the Offering Warrants valuation: May 3, 2024 Risk-free interest rate 4.6 % Expected term (in years) 3.0 Expected volatility 113.5 % Expected dividend yield 0 % Stock price $ 3.76 Exercise price $ 4.68 The Offering Warrants to purchase 884,798 shares of common stock were exercised in April 2025 as part of April 2025 Transactions. As of December 31, 2025, Offering Warrants to purchase 3,388,707 shares of common stock remained outstanding. Prepaid Purchase Agreement On July 29, 2025, the Company entered into a PPA with Yorkville, pursuant to which the Company may request pre-paid advances of up to $ 6,000 from Yorkville over a 12-month period, subject to certain limitations and conditions set forth in the PPA. Each Pre-Paid Advance is 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. All Pre-Paid Advances are due and payable on the 12-month anniversary of their issuance. At any time that there is an outstanding balance under any Pre-Paid Advances, Yorkville may provide written notice, or Purchase Notice, requiring the Company to issue and sell shares of its common stock to Yorkville, which shall be offset against and reduce the amounts outstanding under the Pre-Paid Advance. The initial advance under the PPA of $ 1,000 was purchased on July 29, 2025, with net proceeds of $ 950 after a 5 % original issue discount, or OID. On September 8, 2025, the Company entered into a second PPA with Yorkville for an additional $ 1,000 advance, with net proceeds of $ 950 after the 5 % OID. On October 23, 2025, the Company entered into a third PPA with Yorkville for an additional $ 1,000 advance, with net proceeds of $ 950 after the 5 % OID. F- 24 The Company elected the fair value option under ASC 825, Financial Instruments , or ASC 825, to measure the PPAs at fair value, with changes in fair value recognized in earnings. The initial fair value was determined to be equal to the net proceeds received ($ 950 per PPA), as this amount represented the cash consideration exchanged, consistent with ASC 825. OID costs of $ 100 related to the first and second PPA were expensed as incurred in the third quarter of 2025, as required under the fair value option. Additionally, the Company incurred legal costs of $ 118 which were expensed in the consolidated statements of operations and other comprehensive loss. Under the terms of the PPAs, the Company issued shares of common stock to Yorkville in satisfaction of the advances. The number of shares issued was determined based on the applicable purchase price per share equal to the lower of (a) 115 % of the daily volume weighted average price, or the VWAP, of the Company’s common stock on the last full trading day immediately prior to the date of such Pre‑Paid Advance and (b) 95 % of the lowest daily VWAP of the Company’s common stock during the seven consecutive trading days immediately preceding the date on which Yorkville provides the Purchase Notice to the Company, but in no event less than the floor price set forth in the PPA. The carrying value of the PPA and accrued interest were reduced by the issuance of the shares. Under the terms of the PPAs, through September 24, 2025, the Company issued an aggregate of 1,880,872 shares of common stock to Yorkville ( 953,765 shares under the first PPA through September 9, 2025, and 927,107 shares under the second PPA), based on the principal of $ 2,000 from the PPA and $ 11 of interest expense. The shares were recorded at par value of $ 0.001 per share with the remainder credited to additional paid-in capital, or APIC. On October 23, 2025, Yorkville purchased a third PPA of $ 1,000 , for which the Company received net proceeds of $ 950 . The third PPA was converted to 846,290 shares of the Company’s common stock in October 2025, with no remaining outstanding balance. The shares were recorded at par value of $ 0.001 per share with the remainder credited to APIC. The initial, the second and the third PPAs were fully settled as of December 31, 2025, with no remaining outstanding balance. Accordingly, the fair value of the liabilities at December 31, 2025, was $ 0 , and no adjustment for changes in fair value was required. On December 11, 2025, the Company terminated the PPA. Standby Equity Purchase Agreement On July 29, 2025, the Company entered into a SEPA with Yorkville. Under the SEPA, the Company has the right to sell to Yorkville up to $ 15.0 million of its common stock, par value $ 0.001 per share, subject to certain limitations and conditions set forth in the SEPA, from time to time, over a 36-month period. The Company did not issue any SEPA Advances during the year ended December 31, 2025. On December 11, 2025, the Company terminated the SEPA. At the 2023 Annual Meeting, the Company’s stockholders also approved the issuance, in accordance with Nasdaq Listing Rule 5635(a), of shares of common stock, upon conversion of the Company’s outstanding Series X Preferred Stock. On March 5, 2024, based upon then existing beneficial ownership limitations, 11,957 shares of Series X Preferred Stock were automatically converted into 11,957,000 shares of common stock. As of December 31, 2025, there were: • 12,469,000 shares of common stock reserved for issuance upon conversion of the Series X Preferred Stock; • 3,143,997 shares of common stock issuable upon the exercise of options under existing equity incentive plans; • 420,000 shares of common stock issuable for vested but unsettled restricted stock units (Note 10); • 1,914,194 and 7,500 shares of common stock reserved for issuance under the 2021 Plan (Note 10) and 2017 ESPP (Note 10), respectively, as well as any automatic increases in the number of shares of the common stock reserved under these plans; and F- 25 • 6,621,839 shares of common stock reserved for issuance upon exercise of outstanding warrants. The warrants consist of (i) warrants to purchase 726,437 shares of the Company’s common stock, with an exercise price of $ 5.66 , which expire on May 20, 2029 , which were assumed in connection with the Lung Acquisition, (ii) warrants to purchase 255,000 shares of the Company’s common stock, with an exercise price of $ 4.89 per share, which were issued and sold in the PIPE Financing as described above and expire on May 2, 2027 , (iii) warrants to purchase 3,388,707 shares of the Company’s common stock, with an exercise price of $ 4.68 per share, which were issued and sold in the Offering as described above and expire on May 3, 2027 , (iv) the Exchange Pre-Funded Warrants to purchase 1,939,000 shares of the Company's common stock, with an exercise price of $ 0.001 per share, which were issued and sold in the Warrant Exchanges as described above can be exercised at any time after their original issuance until such Exchange Pre-Funded Warrants are exercised in full, and (v) the Bios Pre-Funded Warrants to purchase 312,695 shares of the Company's common stock, with an exercise price of $ 0.001 per share, which were issued and sold in April 2025 as described above and can be exercised at any time after their original issuance until such Bios Pre-Funded Warrants are exercised in full. Accordingly, as of December 31, 2025, out of the 100,000,000 shares of common stock presently authorized, 52,126,752 shares are issued and outstanding or reserved for issuance and 47,843,248 shares of common stock remain available for future issuance. 9 . Compensation The Company has a 401(k) plan available for participating employees who meet certain eligibility requirements. Eligible employees may defer a portion of their salary as defined by the plan. The Company provides an employer match, which is 100 % of employee deferrals up to the first 3 % of compensation for the period and 50 % of the next 2 % of compensation for the period and is immediately vested. The Company made matching contributions in the amo unt of $ 99 and $ 101 for the years ended December 31, 2025 and 2024, respectively. 10. Stock-Based Awards As of December 31, 2025, the Company had five equity compensation plans, each of which was approved by its stockholders: 2006 Equity Incentive Plan, as amended, or the 2006 Plan, 2016 Stock Incentive Plan, or the 2016 Plan, 2017 Stock Incentive Plan, or the 2017 Plan, 2021 Stock Incentive Plan, or the 2021 Plan, and 2017 Employee Stock Purchase Plan, or the 2017 ESPP. The Company also assumed Lung’s 2013 Long-Term Incentive Plan, or the 2013 Plan, as a result of the Lung Acquisition. As of December 31, 2025, the Company had no shares issuable upon exercise of outstanding options under the 2006 Plan; 8,404 shares to be issued upon exercise of outstanding options under the 2016 Plan, 98,528 shares to be issued upon exercise of outstanding options under the 2017 Plan and 1,520,179 shares to be issued upon exercise of outstanding options under the 2021 Plan. No shares remained available for future awards under the 2006 Plan, the 2016 Plan, and the 2017 Plan as of December 31, 2025. Shares that are expired, terminated, surrendered or canceled without having been fully exercised under the 2017 Plan will be available for future awards under the 2021 Plan. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards under the 2021 Plan. Under the 2021 Plan, shares that are expired, terminated, surrendered or canceled without having been fully exercised will be available for future awards. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards. The exercise price for stock options granted may not be less than the fair market value of the common stock as of the date of grant. 2021 Stock Incentive Plan F- 26 The Company’s 2021 Plan was approved by the Company’s stockholders on June 15, 2021 and became effective on June 16, 2021. At the 2023 Annual Meeting, the stockholders of the Company approved an amendment, or the Plan Amendment, to the 2021 Plan to increase the number of shares of common stock issuable under the 2021 Plan by 3,000,000 shares to 3,840,254 . Other than increasing the number of shares issuable under the 2021 Plan, the Plan Amendment does not make any changes to the 2021 Plan. Under the 2021 Plan, the Company may grant incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, awards of restricted stock units and other stock-based awards. The Company’s employees, officers, directors, consultants and advisors are eligible to receive awards under the 2021 Plan; however, incentive stock options may only be granted to employees. The 2021 Plan is administered by the Board or, at the discretion of the Board, by a committee of the Board. The number of shares of common stock covered by options and the date those options become exercisable, type of options to be granted, exercise prices, vesting and other restrictions are determined at the discretion of the Board, or its committee if so delegated. Stock options granted under the 2021 Plan with service-based vesting conditions generally vest over four years and may not have a duration in excess of ten years , although options have been granted with vesting terms of less than four years . The total number of shares of common stock that may be issued under the 2021 Plan was 3,840,254 as of December 31, 2025, of which 1,914,194 shares remained available for grant. The Company initially reserved 625,000 shares of common stock, plus the number of shares of common stock subject to outstanding awards under the 2017 Plan, the 2016 Plan and the 2006 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right up to 314,006 shares. As of December 31, 2025, the Company had 1,520,179 shares to be issued upon exercise of outstanding options under the 2021 Plan. 2013 Stock Incentive Plan The Company assumed the 2013 Plan as a result of the Lung Acquisition. In October 2013, Lung’s Board of Directors, or the Lung Board, approved the 2013 Plan to provide long-term incentives for its employees, non-employee directors and certain consultants. As of December 31, 2025, 1,516,886 shares were reserved to be issued upon exercise of options outstanding under the 2013 Plan. These options were assumed by the Company in connection with the Lung Acquisition. Before the Lung Acquisition, the 2013 Plan was administered by the Lung Board or, at the discretion of the Lung Board, by a committee of the Lung Board. The exercise prices, vesting and other restrictions were determined at the discretion of the Lung Board, or its committee if so delegated, except that the exercise price per share of stock options may not be less than 100 % of the fair market value of the share of common stock on the date of grant and the term of stock option may not be greater than ten years . The contractual term for stock option awards is ten years . The vesting periods for equity awards were determined by the Lung Board, but generally were four years . The contractual term for stock option awards is ten years . Following the closing of the Lung Acquisition on October 31, 2023, no further awards can be granted under the 2013 Plan. Stock Option Valuation The assumptions that the Company used to determine the grant-date fair value of the stock options granted to employees and directors during the year ended December 31, 2025 and 2024 were as follows, presented on a weighted average basis: Year Ended December 31, 2025 2024 Risk-free interest rate 4.0 % 4.1 % Expected term (in years) 5.5 6.0 Expected volatility 107.1 % 111.9 % Expected dividend rate 0 % 0 % F- 27 Stock Options The following table summarizes the Company’s stock option activity since January 1, 2025: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 1, 2025 3,169,468 $ 5.41 7.0 $ 1,605 Granted 87,500 1.55 — — Exercised ( 21,533 ) 1.05 — 18 Forfeited/Canceled ( 59,310 ) 2.73 — — Expired ( 32,128 ) 22.50 — — Outstanding at December 31, 2025 3,143,997 $ 5.21 6.1 $ 158 Options exercisable at December 31, 2025 2,418,033 $ 6.00 5.4 $ 138 Options vested and expected to vest at December 31, 2025 3,120,459 $ 5.23 6.1 $ 157 Options exercisable at December 31, 2024 2,059,025 $ 6.79 5.6 $ 1,524 Options vested and expected to vest at December 31, 2024 3,120,812 $ 5.45 7.0 $ 1,600 The weighted average grant-date fair value of stock options granted during the year ended December 31, 2025 was $ 1.26 . The weighted average grant-date fair value of stock options granted during the year ended December 31, 2024 was $ 2.46 . The aggregate fair value of stock options that vested during the year ended December 31, 2025 and 2024, was $ 1,025 and $ 1,520 , respectively. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. The aggregate intrinsic value of stock options exercised during the year ended December 31, 2025 and 2024 was $ 18 and $ 354 , respectively. Restricted Stock Units The Company has granted restricted stock units with service-based vesting conditions. Unvested shares of restricted common stock may not be sold or transferred by the holder. A summary of the restricted stock unit activity during the year ended December 31, 2025 is as follows: Restricted Stock Units Weighted-Average Grant-Date Fair Value, $ Unvested - January 1, 2025 — $ — Granted 1,000,000 1.19 Vested ( 1,000,000 ) 1.19 Unvested - December 31, 2025 — $ — The fair value of these vested restricted stock units was $ 1,194 at the grant date and all of the compensation expense was recognized in the year ended December 31, 2025. On October 30, 2025, and December 2, 2025, the Company issued 300,000 and 280,000 shares of common stock for the restricted stock units granted and vested in August 2025, respectively. As of December 31, 2025, there were 420,000 vested restricted stock units that were not issued. Stock-Based Compensation The Company recorded stock-based compensation expense related to stock options and restricted stock units in the following expense categories of its statements of operations and comprehensive loss: F- 28 Year Ended December 31, 2025 2024 Research and development expenses $ 187 $ 162 General and administrative expenses 2,037 955 Total stock-based compensation expense $ 2,224 $ 1,117 As of December 31, 2025, the Company had an aggregate of $ 1,475 of unrecognized stock-based compensation expense, which it expects to recognize over a weighted average period of 2.77 years. 11. Net Loss per Share Basic and diluted net loss per share attributable to common stockholders was calculated as follows : Year Ended December 31, 2025 2024 Numerator: Net loss $ ( 49,871 ) $ ( 62,883 ) Denominator: Weighted average common shares outstanding—basic and diluted 25,444,795 17,938,899 Net loss per share attributable to common stockholders—basic and diluted $ ( 1.96 ) $ ( 3.51 ) As part of the April 2025 Transactions, the Pre-Funded Warrants to purchase an aggregate of 2,251,695 shares of common stock at an exercise price of $ 0.001 per share are included within the denominator for basic net loss per share purposes and considered outstanding as of the date of issuance. The 420,000 restricted stock units vested but not issued as of December 31, 2025, are included in earnings per share calculation as all conditions for issuance have been satisfied making the underlying shares contingently issuable and economically equivalent to outstanding shares. The Company’s potential dilutive securities, which include stock options as of December 31, 2025 and 2024, have been excluded from the computation of diluted net loss per share attributable to common stockholders whenever the effect of including them would be to reduce the net loss per share. In periods where there is a net loss, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The following potential shares of common stock, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect: Year Ended December 31, 2025 2024 Options to purchase common stock 3,143,997 3,169,468 Warrants to issue shares of common stock 6,621,839 7,353,442 Series X Preferred Stock issued and outstanding, as converted 12,232,000 12,232,000 Total 21,997,836 22,754,910 12. Commitments and Contingencies Legal Proceedings The Company may from time to time be party to litigation arising in the ordinary course of business. As of December 31, 2025, the Company was not party to any legal proceedings and no material legal proceedings are currently pending or, to the Company’s knowledge, threatened. F- 29 Intellectual Property Licenses Harvard and Dana-Farber Agreement In August 2006, the Company entered into an exclusive license agreement with President and Fellows of Harvard College, or Harvard, and Dana-Farber Cancer Institute, or DFCI. The agreement granted the Company an exclusive worldwide license, with the right to sublicense, under specified patents and patent applications to develop, obtain regulatory approval for and commercialize specified product candidates based on cell-permeating peptides. Under the agreement, the Company is obligated to use commercially reasonable efforts to develop and commercialize one or more licensed products and to achieve specified milestone events by specified dates. In connection with entering into the agreement, the Company paid an upfront license fee and issued to Harvard and DFCI shares of its common stock. In February 2010, the agreement was amended and restated, or the Harvard/DFCI agreement, under which additional patent rights were added to the scope of the license agreement and the annual license maintenance fees were increased. Under the Harvard/DFCI agreement, the Company is obligated to make aggregate milestones payments of up to $ 7,700 per licensed therapeutic product upon the Company’s achievement of specified clinical, regulatory and sales milestones with respect to such product and up to $ 700 per licensed diagnostic product upon the Company’s achievement of specified regulatory and sales milestones with respect to such product. In addition, the Company is obligated to pay royalties of low single-digit percentages on annual net sales of licensed products sold by the Company, its affiliates or its sublicensees. The royalties are payable on a product-by-product and country-by-country basis and may be reduced in specified circumstances. In addition, the agreement obligates the Company to pay a percentage, up to the mid-twenties, of fees received by the Company in connection with its sublicense of the licensed products. In accordance with the terms of the agreement, the Company’s sublicense payment obligations may be subject to specified reductions. The Harvard/DFCI agreement requires the Company to pay annual license maintenance fees of $ 110 each year, which was reduced to $ 35 starting in 2023. Any payments made in connection with the annual license maintenance fees will be credited against any royalties due. As of December 31, 2025, the Company had not developed a commercial product using the licensed technologies and no royalties under the agreement had been paid or were due. Under the Harvard/DFCI agreement, the Company is responsible for all patent expenses related to the prosecution and maintenance of the licensed patents and applications in-licensed under the agreement as well as cost reimbursement of amounts incurred for all documented patent-related expenses. The agreement will expire on a product-by-product and country-by-country basis upon the last to expire of any valid patent claim pertaining to licensed products covered under the agreement. The Company incurred $ 35 license maintenance fees in the year ended December 31, 2025, which was partially reimbursed by Advancium and the remaining is reimbursable by Rients. The Company incurred $ 35 license maintenance fees in the year ended December 31, 2024. Agreement with the University of Texas Health Science Center at Tyler In June 2013, the Company entered into a patent and technology license agreement with UT System, on behalf of UTHSCT. The patent and technology license agreement with UT System, or the UTHSCT Agreement, provides the Company access to patents and technology related to the development of LTI-01 and LTI-03. As part of the UTHSCT Agreement, the Company has (i) a royalty-bearing, exclusive license under the patent rights to manufacture, distribute, and sell certain intellectual property; (ii) a non-exclusive license under the technology rights to manufacture, distribute and sell the licensed product; and (iii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the UTHSCT Agreement. In December 2013, the UTHSCT Agreement was amended and restated to include certain patents in all fields worldwide. In May 2017, the UTHSCT Agreement was amended and restated to modify the specific milestone criteria. In consideration of the UTHSCT Agreement, the Company agreed to pay past and ongoing patent expenses, and the Company owes UTHSCT sublicensing fees, assignment fees, and single digit royalties on worldwide net product sales, with fixed minimum royalty payments that started in 2015. Pursuant to the UTHSCT Agreement, the Company is required to use diligent efforts to commercialize the licensed technology as soon as commercially practicable, including maintaining active research and development, regulatory, marketing and sales program, all as commercially reasonable. F- 30 The Company may terminate the UTHSCT Agreement for convenience with 90 days’ notice. UTHSCT may also terminate the UTHSCT Agreement, but only if the Company breaches the terms of the agreement. The Company did not incur any expense under the UTHSCT Agreement in the years ended December 31, 2025 and 2024. Agreement with the University of Texas at Austin In May 2015, the Company entered into a patent license agreement with UT Austin on behalf of UT System. This license agreement with UT Austin, or the UT Austin 6607 Agreement, relates to the patent rights to polypeptide therapeutics and uses thereof. Pursuant to the UT Austin 6607 Agreement the Company has (i) a royalty-bearing, exclusive license under the patent rights to manufacture, distribute, and sell the licensed product; and (ii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement. The UT Austin 6607 Agreement was amended and restated in January 2017, November 2018, and June 2019. The amendments related to extension of milestone payment dates and specific terminology around the milestone achievement criteria. In consideration of the UT Austin 6607 Agreement, the Company agreed to pay past and ongoing patent expenses, milestone fees upon certain development and regulatory milestone events, annual license fees, tiered sublicense fees, assignment fees, low single digit royalties on net sales and a Food and Drug Administration, or FDA, Priority Review Voucher fee if the Company sells or transfers this voucher. Pursuant to the UT Austin 6607 Agreement, the Company is required to use diligent efforts to commercialize the licensed products, including maintaining active research and development, regulatory, marketing and sales program. Moreover, the Company is required to meet certain development and regulatory milestones by specific dates. The Company may terminate the UT Austin 6607 Agreement for convenience with 90 days’ notice. UT Austin may also terminate the UT Austin 6607 Agreement, but only if the Company breaches the terms of the agreement. The Company did not incur any expense under the UT Austin 6607 Agreement in the years ended December 31, 2025 and 2024. Agreement with Medical University of South Carolina In March 2016, the Company entered into a license agreement with Medical University of South Carolina Foundation for Research Development, or MUSC. Pursuant to this license agreement with MUSC, or the MUSC Agreement, the Company has patent rights related to protecting against lung fibrosis by up regulating Cav1. The MUSC Agreement granted (i) a royalty-bearing, exclusive license under the patent rights to make, use and sell the license product; and (ii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement. In September 2018, the agreement was amended and restated to include definitions of related methods, related products and related rights. In consideration of the MUSC Agreement, the Company agreed to pay a non-refundable license fee, patent expenses, milestone fees upon certain development, regulatory and commercial milestone events, sublicense fees, assignment fees and low single digit royalties on net sales, with a fixed minimum royalty payment starting in 2019 and a transaction fee upon the Company’s liquidation. Pursuant to the MUSC Agreement, the Company is required to use diligent efforts to develop, manufacture and sell the licensed products. The Company may terminate the MUSC Agreement for convenience by providing a written notice to MUSC effective 90 days following the receipt of notice, and either party may terminate the agreement for a breach of contract. The Company incur red $ 25 license fees in the years ended December 31, 2025 and 2024, respectively. Agreement with Vivarta Therapeutics LLC In March 2018, the Company entered into a license agreement with Vivarta Therapeutics, LLC, or Vivarta. This license agreement with Vivarta, or the Vivarta Agreement, relates to intellectual property relating to epithelial sodium channel inhibitors and methods to treat pulmonary disease. Pursuant to the Vivarta Agreement the Company has (i) a royalty-bearing, exclusive license under the intellectual property rights to make, use and sell the licensed product, and (ii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement. In consideration for the Vivarta Agreement, the Company agreed to grant Vivarta a warrant to purchase an aggregate of 75,000 shares of common stock of Lung for $ 0.12 per share, to pay a license fee of $ 10,000 upon the F- 31 Vivarta Agreement effective date and $ 40,000 within 30 days of the receipt of a positive freedom to operate analysis from legal counsel. The Company also agreed to pay patent expenses, milestone fees upon certain development and regulatory milestone events, sublicense fees, assignment fees and low single digit royalties on net sales. Pursuant to the Vivarta Agreement, the Company is required to use diligent efforts to develop, manufacture and sell the licensed products. The Company may terminate the Vivarta Agreement for convenience by providing a written notice to Vivarta effective 90 days following the receipt of notice, and either party may terminate the agreement for a breach of contract. The Company did not incur any expenses under the Vivarta Agreement in the years ended December 31, 2025 and 2024. Master Services Agreement In April 2025, the Company 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 the Company’s Protocol LTI-03-2001. Pursuant to the agreement, the Company 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 On October 31, 2024, the Company entered into an exclusive option agreement, or the Option Agreement, with Advancium Health Network, or Advancium, for the sale of ALRN-6924, a clinical stage oncology agent that the Company was developing prior to the Lung Acquisition (as defined below). During the option period, Advancium intends to evaluate ALRN-6924 as a potential therapy for retinoblastoma. Under the terms of the option agreement Advancium paid the Company a non-refundable fee of $ 0.1 million for the exclusive option to acquire ALRN-6924 and related assets. If Advancium exercises its option, the Company will 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. 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. Project Addendum In December 2025, the Company entered into a project addendum with a third party CRO for the purposes of setting forth the responsibilities and obligations of the parties in regards to conducting a certain clinical research program entitled “A Phase 2, Randomized, Double-Blind, Placebo-Controlled Study of the Safety, Tolerability and Efficacy of Caveolin-1-Scaffolding-Protein-Derived Peptide in Patients with IPF” under the Company’s Protocol LTI-03-2001. Pursuant to the project addendum, the Company had contracted for up to $ 19.8 million of master services. Advisory Agreements The Company has entered into various arrangements with certain business advisors, consultants, and investment institutions to assist the Company with fundraising and to provide certain advisory services. In connection with these arrangements, the Company 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 the successful fundraising. There are no contingent fees payable under these arrangements as of December 31, 2025 or December 31, 2024. Indemnification Agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In F- 32 addition, the Company has entered into indemnification agreements with members of its board of directors and officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it had not accrued any liabilities related to such obligations in its consolidated financial statements as of December 31, 2025 or December 31, 2024. 13. Segment Reporting The Company has one reportable segment which focuses on developing novel therapies for the treatment of orphan pulmonary and fibrosis indications with no approved or limited effective treatments. The Company’s CODM, the CEO , manages the Company’s operations on a consolidated basis as one operating segment for the purposes of evaluating financial performance and allocating resources. The Company has not generated any revenue yet. The CODM assesses the financial performance of the segment and decides how to allocate resources based on net loss on a consolidated basis. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. The CODM uses net loss predominantly in the annual operating budget and in the strategic planning and forecasting process. Such loss measure is used to monitor budget versus actual results on an ongoing basis by the CODM and determine how resources are allocated to the various activities of the Company. The CODM also uses net loss to evaluate the Company’s performance and assist in determination of management’s incentive compensation. All of the Company’s tangible assets are held in the United States. The Company views its operations and manages its business in one operating segment operating exclusively in the United States. F- 33 The table below is a summary of the segment loss, including significant segment expenses: Year Ended December 31, 2025 2024 Revenues $ — $ — Research and development expenses: LTI-01 program-related expenses: Preclinical study costs — 2 CMC activities 1,066 3,566 Clinical operation activities 413 46 Total LTI-01 program-related expenses 1,479 3,614 LTI-03 program-related expenses: Preclinical study costs 778 1,935 CMC activities 2,239 2,451 Clinical operation activities 4,285 3,913 Total LTI-03 program-related expenses 7,302 8,299 Other program-related expenses 11 54 Employee related expenses 2,119 2,200 Professional fees for services 44 34 Facilities and other expenses 74 47 Total research and development expenses 11,029 14,248 General and administrative expenses: Employee related expenses 3,748 5,465 Professional fees for services 5,191 6,257 Facilities and other expenses 1,963 2,142 Total general and administrative expenses 10,902 13,864 Impairment loss on intangible assets 28,700 37,000 Other income, net ( 48 ) ( 685 ) Income tax benefit ( 712 ) ( 1,544 ) Segment and consolidated net loss $ ( 49,871 ) $ ( 62,883 ) 14. Income Taxes On October 31, 2023, the Company acquired, in accordance with the terms of the Lung Acquisition Agreement, the stock of Lung. In accordance with ASC 805, Business Combination , recognition of deferred tax assets and liabilities is required for substantially all temporary differences and acquired tax carryforwards and credits. The Company has computed estimated temporary differences and acquired tax carryforwards and credits as of the transaction date. The Company will not have tax basis in intangible assets recorded as part of the purchase. For accounting purposes, the intangible assets will not be amortized and subject to impairment review and testing. Though the tax effects may be delayed indefinitely, ASC 740, Accounting for Income Taxes, states that “deferred tax liabilities may not be eliminated or reduced because a reporting entity may be able to delay the settlement of those liabilities by delaying the events that would cause taxable temporary differences to reverse.” As such, the Company has recorded a deferred tax liability for the portion of the liability that cannot be offset with indefinite lived deferred tax assets. The Company reported an income tax benefit of $ 712 for the year ended December 31, 2025. The reported amount of income tax expense for the years differs from the amount that would result from applying domestic federal statutory tax rates to pretax losses primarily because of changes in valuation allowance and indefinite lived intangibles. F- 34 Income tax benefit consist of the following : Year Ended December 31, 2025 2024 Current tax (provision) benefit: Federal $ — $ — State — — Foreign — — Total current tax (provision) benefit — — Deferred tax (provision) benefit: Federal 1,336 1,544 State ( 624 ) — Foreign — — Total deferred tax benefit 712 1,544 Total income tax benefit $ 712 $ 1,544 A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows: Year Ended December 31, 2025 Year Ended December 31, 2024 Rate Amount Rate Amount U.S. Federal statutory income tax rate ( 21.0 )% $ ( 10,616 ) ( 21.0 )% $ ( 13,495 ) State and local income taxes, net of federal benefit 1.2 1 619 ( 1.3 ) ( 840 ) Research and development and orphan drug tax credits ( 0.2 ) ( 103 ) ( 0.6 ) ( 400 ) Nontaxable or nondeductible items — 3 — 19 Foreign Tax Effects — — — — Effects of Cross-Border Tax Laws — — — — Changes in Unrecognized Tax Benefits — — — — Effect of Changes in Tax Laws or Rates Enacted in the Current Period — — — — Change in valuation allowances 17.3 8,724 18.6 11,947 Stock compensation 1.5 737 1.9 1,225 Other reconciling items ( 0.2 ) ( 76 ) — — Effective income tax rate ( 1.4 )% $ ( 712 ) ( 2.4 )% $ ( 1,544 ) F- 35 Net deferred tax liabilities as of December 31, 2025 and 2024 consisted of the following: December 31, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 28,676 $ 17,423 Research and development and orphan drug tax credit carryforwards 8,328 8,226 Capitalized research and development expenses 6,573 10,907 Accrued expenses and reserves 271 340 Stock compensation 508 608 Total deferred tax assets 44,356 37,504 Valuation allowance ( 42,129 ) ( 30,454 ) Net deferred tax assets $ 2,227 $ 7,050 Deferred tax liabilities: Depreciation and amortization $ ( 3,287 ) $ ( 8,822 ) Right of use asset $ — $ — Total deferred tax liabilities $ ( 3,287 ) $ ( 8,822 ) Net deferred tax liability $ ( 1,060 ) $ ( 1,772 ) The Company owns Lung Therapeutics, LLC, Lung Therapeutics Australia Pty Ltd, and Lung Therapeutics Limited. There is no material foreign activity during the year ended December 31, 2025. There are no foreign tax attributes for the Company as of December 31, 2024 or December 31, 2025, respectively. As such, certain items have not been separately disaggregated in the income tax disclosures, as it was determined that such disaggregation would not be material, consistent with the materiality guidance in ASC 105-10-05-6. As of December 31, 2025, the Company had net operating loss carryforwards for federal and state purposes of $ 122,682 and $ 46,077 , respectively. $ 2,863 of the U.S. federal tax operating loss carryforwards will begin to expire in 2036 . Approximately $ 119,820 of the U.S. federal tax operating losses can be carried forward indefinitely. Of this amount, $ 44,420 of federal net operating losses came over from the Lung Acquisition, of which $ 2,863 will begin to expire in 2036 and the remaining $ 41,557 can be carried forward indefinitely. The state tax operating loss carryforwards expire beginning in 2043 . As of December 31, 2025, the Company also had available research and development tax credit carryforwards for federal income tax purposes of $ 2,528 , which begin to expire in 2035 . As of December 31, 2025, the Company also had available orphan drug credit carryforwards of $ 5,800 for federal income tax purposes, which begin to expire in 2039 . Of this amount, $ 2,222 of research and development credit carryforwards and $ 5,644 of orphan drug credit carryforwards came over from the Lung Acquisition. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. The OBBBA amends U.S. tax law including provisions related to domestic research and development expenses and bonus depreciation, among others. Under the OBBBA provisions, effective with tax years beginning on or after January 1, 2025, taxpayers can now immediately expense domestic research and development expenditures as well as accelerate previously capitalized domestic research and development expenditures from 2022-2024. Taxpayers are still required to capitalize and amortize research and development expenditures over 15 years for research conducted abroad. As a result, the Company expensed net $ 25,277 of research and development expenses for the year ended December 31, 2025 for tax purposes. Utilization of the net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50 % over a three-year period. As of December 31, 2023, the Company has wound down its original business operations and entered into a merger in the year, which resulted in a significant shift in ownership. The Company expects to have all prior year net operating losses and tax credits of its legacy business to be completely limited going forward due to the lack of continuation in its legacy business. As such, all prior year net operating losses and tax credits have been written down to zero as of December 31, 2023 through December 31, 2025, respectively. The remaining net operating losses and tax credits as of December 31, 2025 relate to post-merger F- 36 activity, as well as acquired attributes as part of the merger. A study has been completed on the Target ownership shifts through December 31, 2023, and multiple ownership changes were determined. As a result, the Company has written down the $ 1,673 portion of the Target net operating losses expected to expire unutilized and include the $ 44,420 of remaining net operating losses and $ 7,638 of federal tax credits as part of its available attributes. As of December 31, 2025, the total federal net operating losses are $ 122,726 and federal research and development tax credits are $ 8,328 , which could be subject to future limitations under these rules. The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s cumulative net losses and its lack of commercialization of any products or generation of any revenue from product sales since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. The Company maintained a full valuation allowance on its net deferred tax assets as of December 31, 2025. Management reevaluates the positive and negative evidence at each reporting period. The increase in the valuation allowance for deferred tax assets during the years ended December 31, 2025 and December 31, 2024 of $ 11,675 and $ 11,948 , respectively, related primarily to an increase in net operating loss carryforwards. Changes in the valuation allowance were as follows: Year Ended December 31, 2025 2024 Valuation allowance at beginning of year $ ( 30,454 ) $ ( 18,506 ) Decreases recorded as a benefit to income tax provision ( 11,675 ) ( 11,948 ) Valuation allowance at end of year $ ( 42,129 ) $ ( 30,454 ) The Company has no t recorded any amounts for unrecognized tax benefits as of December 31, 2025 or 2024. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The major jurisdictions of the Company are federal and Massachusetts. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax years are still open under statute from 2021 to the present. Earlier years may be examined to the extent that tax credit or net operating loss carryforwards are used in future periods. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. As of December 31, 2025 and 2024, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s consolidated statements of operations and comprehensive loss. There are no foreign jurisdictions that the Company operates in as of December 31, 2024 or December 31, 2025, respectively. 15. Subsequent Events The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements. At the Market Offering Subsequent to the consolidated balance sheet date, the Company continued its “at the market” offering program under the Wainwright Sales Agreement (described in Notes 1 and 8). Through March 26, 2026, the Company issued and sold 296,810 shares of common stock pursuant to the “at the market” offering program for total net proceeds of $ 354 , after deducting transaction fees of $ 16 paid by the Company. 2026 Bridge Loans In January 2026 and February 2026, the Company entered into separate securities purchase agreements, or the Purchase Agreements, with three institutional investors pursuant to which we issued and sold to the investors, in a private placement, unsecured promissory notes in the aggregate original principal amount of $ 5,375 , or the Notes. Pursuant to the Purchase Agreements, the Company issued and sold the Notes to the investors for the aggregate purchase price of $ 4,300 , inclusive of an original issue discount of 20 %. The Notes have a stated maturity date of the earlier of (i) the date of the closing of the next issuance and sale of the Company’s securities, in a single transaction or series of related transactions, to investors resulting in gross proceeds to the Company of at least $ 10,000 (exclusive of the Notes proceeds) or (ii) June 30, 2026. The Company’s obligations under the Notes are unsecured. There is no interest payable under the promissory notes other than the 20 % F- 37 original issue discount. The Purchase Agreements contained representations, warranties, covenants and other terms customary for agreements of such nature. Issuance of Common Stock In January 2026 and March 2026, the Company issued 192,000 shares of common stock for the restricted stock units granted and vested in August 2025. F- 38