What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-02 compared with 2025-03-20 · 185 added, 203 removed, 548 unchanged (41% of the section changed)

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Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity ( Deficit )

Consolidated Statements of Cash Flows

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sionna Therapeutics, Inc., and subsidiary (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders' deficit, and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements").

We have audited the accompanying consolidated balance sheets of Sionna Therapeutics, Inc., and subsidiary (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

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Marketable securities, current

177,431 109,750

Prepaid expenses and other current assets 5,537 3,455

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Total assets $ 325,953 $ 185,752

Liabilities, convertible preferred stock and stockholders’ deficit

Liabilities, convertible preferred stock and stockholders’ equity (deficit)

Current liabilities:

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Operating lease liability, current 1,269 1,072

Other current liabilities 6 —

Total current liabilities 11,712 10,420

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Commitments and contingencies (Note 8)

Series Seed convertible preferred stock, $0.001 par value, 3,963,963 shares authorized, issued and outstanding as of December 31, 2024 and 2023;

liquidation value of $13,200 as of December 31, 2024 and 2023 13,014 13,014

Series A convertible preferred stock, $0.001 par value, 5,704,161 shares authorized, issued and outstanding as of December 31, 2024 and 2023;

liquidation value of $25,263 as of December 31, 2024 and 2023 25,235 25,235

Series B convertible preferred stock, $0.001 par value, 11,370,621 shares authorized, issued and outstanding as of December 31, 2024 and 2023;

liquidation value of $111,000 as of December 31, 2024 and 2023 110,791 110,791

Series C convertible preferred stock, $0.001 par value, 18,628,970 and 0 shares authorized, issued and outstanding as of December 31, 2024 and 2023, respectively;

liquidation value of $181,856 as of December 31, 2024 181,328 —

Series Seed convertible preferred stock, $ 0.001 par value, no shares and 3,963,963 shares authorized, issued and outstanding as of December 31, 2025 and December 31, 2024, respectively

Series A convertible preferred stock, $ 0.001 par value, no shares and 5,704,161 shares authorized, issued and outstanding as of December 31, 2025 and December 31, 2024, respectively

Series B convertible preferred stock, $ 0.001 par value, no shares and 11,370,621 shares authorized, issued and outstanding as of December 31, 2025 and December 31, 2024, respectively

Series C convertible preferred stock, $ 0.001 par value, no shares and 18,628,970 shares authorized, issued and outstanding as of December 31, 2025 and December 31, 2024, respectively

Total convertible preferred stock — 330,368

Stockholders’ deficit:

Common stock, $0.001 par value, 55,200,000 and 30,000,000 shares authorized as of December 31, 2024 and 2023, respectively;

4,798,721 and 3,313,012 shares issued, 4,722,763 and 3,050,863 shares outstanding as of December 31, 2024 and 2023, respectively 5 2

Stockholders’ equity (deficit):

Preferred stock, $ 0.001 par value, 10,000,000 and no shares authorized as of December 31, 2025 and December 31, 2024, respectively;

no shares issued or outstanding as of December 31, 2025 and December 31, 2024

Common stock, $ 0.001 par value, 500,000,000 and 55,200,000 shares authorized as of December 31, 2025 and December 31, 2024, respectively;

44,723,585 and 4,798,721 shares issued, 44,723,585 and 4,722,763 shares outstanding as of December 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 562,602 17,000

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Accumulated deficit ( 256,354 ) ( 181,086 )

Total stockholders’ deficit (163,713) (114,881)

Total liabilities, convertible preferred stock and stockholders’ deficit $ 185,752 $ 51,945

Total stockholders’ equity (deficit) 306,833 ( 163,713 )

Total liabilities, convertible preferred stock and stockholders’ equity (deficit) $ 325,953 $ 185,752

The accompanying notes are an integral part of these consolidated financial statements.

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Comprehensive loss:

Net loss $ (61,688) $ (47,263)

Other comprehensive income:

$ ( 75,268 ) $ ( 61,688 )

Unrealized gain on marketable securities

Total other comprehensive gain

Comprehensive loss

$ ( 75,096 ) $ ( 61,320 )

The accompanying notes are an integral part of these consolidated financial statements.

SIONNA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share amounts)

Comprehensive

Income (Loss)

Stockholders’

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Balance at December 31, 2023 3,963,963 $ 13,014 5,704,161 $ 25,235 11,370,621 $ 110,791 — $ — 3,050,863 $ 2 $ 4,515 $ — $ ( 119,398 ) $ ( 114,881 )

Issuance of Series C Preferred Stock, net of issuance costs of $ 528

— — — — — — 18,628,970 181,328 — — — — — —

Issuance of common stock from IPR&D acquisition — — — — — — — — 1,414,445 2 8,637 — — 8,639

Exercise of common stock options — — — — — — — — 71,264 1 140 — — 141

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Balance at December 31, 2024 3,963,963 $ 13,014 5,704,161 $ 25,235 11,370,621 $ 110,791 18,628,970 181,328 4,722,763 $ 5 $ 17,000 $ 368 $ ( 181,086 ) $ ( 163,713 )

Issuance of Series C Preferred Stock, net of issuance costs of $528

Conversion of convertible preferred stock to common stock upon closing of initial public offering ( 3,963,963 ) ( 13,014 ) ( 5,704,161 ) ( 25,235 ) ( 11,370,621 ) ( 110,791 ) ( 18,628,970 ) ( 181,328 ) 27,149,206 27 330,340 — — 330,367

Issuance of common stock from initial public offering, net of issuance costs of $ 4,265

— — — — — — — — 12,176,467 12 199,558 — — 199,570

Issuance of common stock from IPR&D acquisition — — — — — — — — 1,414,445 2 8,637 8,639

Exercise of common stock options — — — — — — — — 599,191 1 3,638 — — 3,639

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Adjustments to reconcile net loss to net cash used in operating activities:

Non-cash expense related to IPR&D acquisition 8,639 —

Stock-based compensation expense 12,066 3,708

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Amortization of discount on marketable securities ( 3,052 ) ( 3,001 )

Non-cash expense related to IPR&D acquisition — 8,639

Depreciation expense 647 668

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Accounts payable ( 417 ) 467

Accrued expenses 1,080 (1,106)

Operating lease liabilities (1,897) (172)

Accrued expenses and other current liabilities 1,975 1,080

Operating lease liability ( 2,128 ) ( 1,897 )

Other assets — 35

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Maturities of marketable securities 206,653 55,955

Net cash (used in) provided by investing activities (126,913) 27,352

Net cash used in investing activities ( 118,749 ) ( 126,913 )

Cash flows from financing activities:

Proceeds from initial public offering, net of underwriter discounts, commissions and offering costs paid during the period 202,071 —

Proceeds from issuance of Series C convertible preferred stock, net of issuance costs — 181,328

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Net cash provided by financing activities 205,710 178,967

Net decrease in cash, cash equivalents and restricted cash (733) (16,316)

Net increase (decrease) in cash, cash equivalents and restricted cash 20,664 ( 733 )

Cash, cash equivalents and restricted cash at beginning of period 38,750 39,483

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Supplemental disclosure of non-cash investing and financing activities:

Conversion of convertible preferred stock into common stock upon closing of initial public offering $ 330,368 $ —

Offering costs transferred to additional paid in capital 4,265 —

Deferred offering costs in accrued expenses — 492

Right-of use asset obtained in exchange for new operating lease liability — 9,516

Reconciliation of cash, cash equivalents and restricted cash:

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Sionna Therapeutics, Inc.

(the “Company”), formerly known as Sling Therapeutics, Inc., is a clinical-stage biopharmaceutical company dedicated to researching and developing novel medicines for cystic fibrosis.

The Company was incorporated in Delaware in August 2019 and is headquartered in Waltham, Massachusetts.

(the “Company”), formerly known as Sling Therapeutics, Inc., was incorporated in Delaware in August 2019 and is headquartered in Waltham, Massachusetts.

The Company is a clinical-stage biopharmaceutical company on a mission to revolutionize the current treatment paradigm for cystic fibrosis (“CF”) patients by developing novel medicines that normalize the function of the cystic fibrosis transmembrane conductance regulator (“CFTR”) protein to deliver clinically meaningful benefit to CF patients.

Risks and Uncertainties

The Company is subject to a number of risks common to other companies in the biotechnology industry, including but not limited to, development by competitors of new technological innovations, risks of failure of preclinical studies and clinical trials, development and manufacturing of product candidates, obtaining regulatory approval for product candidates, competition from substitute products, the need to successfully commercialize and gain market acceptance of its product candidates, protection of proprietary technology, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third party organizations compliance with government regulations, and the need to obtain additional financing.

The Company is subject to a number of risks common to other companies in the biotechnology industry, including but not limited to, development by competitors of new technological innovations, risks of failure of preclinical studies and clinical trials, risks related to development and manufacturing of product candidates, obtaining regulatory approval for product candidates, competition from substitute products, the need to successfully commercialize and gain market acceptance of its product candidates, protection of proprietary technology, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third party organizations, compliance with government regulations, and the need to obtain additional financing.

Product candidates currently under development will require significant additional research and development efforts, including extensive clinical testing and regulatory approval, prior to commercialization.

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Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Reverse Stock Split

On January 31, 2025, the Company effected a 1-for-1.4611 reverse stock split of its issued and outstanding shares of common stock, which also resulted in a proportional adjustment to the conversion price for each series of its convertible preferred stock and to the exercise prices of the outstanding stock options.

The par value and authorized number of shares of common stock and redeemable convertible preferred stock were not adjusted as a result.

All share and per share amounts for all periods presented in the consolidated financial statements and notes thereto have been retroactively adjusted to reflect the effect of the reverse stock split.

Initial Public Offering

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Liquidity and Going Concern

The Company historically has funded its operations primarily with proceeds from the sale of convertible preferred stock and has not generated revenue from product sales or other sources.

As of December 31, 2024, the Company has raised an aggregate of $330.4 million in net proceeds through the sale of convertible preferred stock.

The Company has incurred annual net operating losses and has generated negative operating cash flows in every year since inception.

As of December 31, 2024, the Company had an accumulated deficit of

$181.1 million.

As of December 31, 2025, the Company had an accumulated deficit of $ 256.4 million.

The Company expects its operating losses to continue into the foreseeable future as it continues to pursue its research and development efforts.

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 that these consolidated financial statements are issued.

The Company believes that its existing cash, cash equivalents, and marketable securities together with the additional proceeds received from the IPO will be sufficient to allow the Company to fund operations beyond twelve months from the date of issuance of these consolidated financial statements.

The Company believes that its existing cash, cash equivalents, and marketable securities of $ 310.3 million as of December 31, 2025 will be sufficient to allow the Company to fund operations beyond twelve months from the date of issuance of these consolidated financial statements.

Summary of Significant Accounting Policies

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As of December 31, 2025 and 2024, the Company had restricted cash of $ 1.0 million held to secure a letter of credit associated with the Company’s leased corporate headquarters.

The restricted funds are maintained in a certificate of deposit account.

The Company classified this amount as restricted cash in the accompanying consolidated balance sheets within other assets based on the release date of the restrictions.

The restricted funds are maintained in a money market account.

The Company classified this amount as restricted cash in the accompanying consolidated balance sheets based on the release date of the restrictions.

Marketable Securities

The Company classifies marketable securities with a remaining maturity greater than three months at the time of purchase and less than one year from the balance sheet date as current.

Marketable securities would be classified as long-term assets on the consolidated balance sheets if the maturity exceeded one year, and the Company did not intend to utilize the marketable securities to fund current operations.

Marketable securities are classified as long-term assets on the consolidated balance sheets if the maturity exceeds one year, and the Company does not intend to utilize the marketable securities to fund current operations.

The Company classifies all of its investments as available-for-sale securities.

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Realized gains and losses and amortization of discounts and premiums are included in interest income, which is a component of other income.

Unrealized gains and losses on available-for-sale securities are included in accumulated other comprehensive loss as a component of

stockholders’ deficit until realized.

Unrealized gains and losses on available-for-sale securities are included in accumulated other comprehensive gain as a component of stockholders’ equity (deficit) until realized.

Interest receivables earned on marketable securities are recorded as a component of prepaid expenses and other current assets.

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The Company regularly invests excess cash with major financial institutions in money market funds, U.S.

Treasury securities and government agency securities, and commercial paper, all of which can be readily purchased and sold using established markets.

Treasury securities and government agency securities, corporate bonds, and commercial paper, all of which can be readily purchased and sold using established markets.

The Company believes that the market risk arising from its holdings of these financial instruments is mitigated based on the fact that many of these securities are either government-backed or of high credit rating.

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Level 3 inputs include management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of the fair value requires more judgement.

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 input that is significant to the fair value measurement.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of the 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.

The Company does not currently have recurring fair value measurements classified within Level 3.

The carrying values of prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

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When an item is sold or retired, the costs and related accumulated depreciation are eliminated, and the resulting gain or loss, if any, is credited or charged to the consolidated statement of operations and comprehensive loss.

Property and equipment to be disposed of is carried at fair value less costs to sell.

Property and equipment held for disposal are carried at fair value less costs to sell.

Impairment of Long-Lived Assets

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(iii) costs associated with preclinical and clinical activities and (iv) lab supplies, lab expenses and an allocation of rent, depreciation, and infrastructure.

The Company recognizes research and development costs in the periods in which they are incurred.

The Company recognizes research and development costs in the periods in which they are incurred because these activities have no alternative future use.

Typically, external expenses are recognized based on an evaluation of the progress to completion of specific tasks using information obtained from (i) internal personnel regarding the services that have been performed on the Company's behalf and estimating the associated cost incurred for those services or (ii) information provided to the Company by their service providers as of each reporting date .

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Acquired IPR&D that has no alternative future use as of the acquisition date is recognized as research and development expense as of the acquisition date.

The costs to acquire IPR&D are presented as operating activities in the consolidated statements of cash flows in the period acquired.

The Company will recognize additional research and development expenses in the future if and when the Company becomes obligated to make contingent milestone or royalty payments which are governed by the terms of the agreements by which it acquired the IPR&D assets.

Developmental and regulatory milestone payments will be recorded when the milestone is achieved, and commercial milestones, such as sales-based milestone payments, and royalties will be recorded when the underlying sale(s) occur.

The Company presents the costs to acquire IPR&D as a component of operating activities in the consolidated statements of cash flows.

All patent-related costs incurred in connection with filing and prosecuting patent applications such as direct application fees, and legal and consulting expenses are expensed as incurred due to the uncertainty about the recovery of the expenditure.

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Convertible Preferred Stock

The Company’s convertible preferred stock is classified as temporary equity in the accompanying consolidated balance sheets and excluded from stockholders’ deficit as the potential redemption of such stock is outside the Company’s control and would require the redemption of the then-outstanding convertible preferred stock.

The convertible preferred stock is not redeemable except for in the event of a liquidation, dissolution, or winding up of the Company (see Note 10).

Costs incurred in connection with the issuance of convertible preferred stock are recorded as a reduction of gross proceeds from issuance.

Subsequent adjustments of the carrying values to the ultimate redemption values will be made only when it becomes probable that these events will occur.

Prior to the completion of the Company's IPO, the Company had outstanding convertible preferred stock, which was classified as temporary equity in the consolidated balance sheets.

Upon the completion of the IPO, all outstanding shares of convertible preferred stock automatically converted into shares of common stock, and the carrying value of the convertible preferred stock was reclassified to stockholder's equity.

As of December 31, 2025 , no shares of convertible preferred stock were outstanding.

Fair Value of Common Stock

The Company determined the estimated fair value of common stock prior to the completion of the IPO based on a number of objective and subjective factors, including, but not limited to, external market conditions affecting the biotechnology industry sector, the prices at which the Company sold shares of convertible preferred stock and the superior rights and preferences of securities senior to the Company’s common stock at the time, and the likelihood and potential timing of achieving a liquidity event, such as an initial public offering, in light of prevailing market conditions.

The Company utilized valuation methodologies in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation , to estimate the fair value of common stock.

The methodologies utilized to estimate the fair value of common stock prior to the completion of the IPO included the option pricing method (“OPM”) or the hybrid method, both of which use a market approach to estimate the Company’s equity value.

The OPM treats common stock and convertible preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes.

Under the OPM, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the convertible preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger.

The hybrid method is a probability-weighted expected return method ("PWERM") where the equity value in one or more of the scenarios is calculated using an OPM.

The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for the Company assuming various outcomes.

The common stock value is based on the probability-weighted present value of expected future invest returns considering each of the possible outcomes available as well as the rights of each class of stock.

The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common stock.

A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for the common stock.

Significant changes to the key assumptions used in the valuations could result in different fair values of common stock.

Prior to the completion of the Company's IPO, the Company determined the estimated fair value of common stock based on a number of objective and subjective factors, including, but not limited to, external market conditions affecting the biotechnology industry sector, the prices at which the Company sold shares of convertible preferred stock and the superior rights and preferences of securities senior to the Company’s common stock at the time, and the likelihood and potential timing of achieving a liquidity event, such as an initial public offering, in light of prevailing market conditions.

The Company utilized valuation methodologies to estimate the fair value of common stock that were in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation , including the option pricing method and the probability-weighted expected return method.

These methodologies required the use of significant management judgment and assumptions.

Since completion of the IPO, the fair value of the Company's common stock has been determined based on the closing market price of the Company's common stock on the date of equity grant.

Stock-Based Compensation

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Restricted common stock awards are subject to repurchase rights until such awards meet all vesting conditions.

Accordingly, the Company has recorded the proceeds from the issuance of restricted common stock awards as a liability in the consolidated balance sheets.

The restricted common stock liability is reclassified into stockholders’ equity as the restricted common stock vests.

Accordingly, the Company recorded the proceeds from the issuance of restricted common stock awards as a liability in the consolidated balance sheets.

The restricted common stock liability was reclassified into stockholders’ equity as the restricted common stock vested.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

The Board of Directors of the Company (the “Board”) determines the fair value of the Company’s common stock taking into consideration its most recently available third-party valuations of common stock as well as additional factors which may have changed since the date of the most recent contemporaneous valuation through grant date.

Due to the lack of Company-specific historical and implied volatility information, the Company estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until it has adequate historical data regarding the volatility of its own traded stock price.

The Company uses the simplified method as prescribed by the Securities and Exchange Commission’s Staff Accounting Bulletin No.

107, Share-Based Payment , to calculate the expected term for options granted to employees and non-employees as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.

107, Share-Based Payment , to estimate the expected term for options granted to employees and non-employees as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.

The risk-free interest rate is determined by reference to the U.S.

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Expected dividend yield is zero because the Company has never paid cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future.

The Company’s provision for income taxes, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect our best assessment of estimated future taxes to be paid.

The Company’s provision for income taxes, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management's best assessment of estimated future taxes to be paid.

Significant judgments and estimates based on interpretations of existing tax laws or regulations in the United States are required in determining our provision for income taxes.

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Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.

Diluted net loss per share is computed using the weighted-average number of common shares outstanding during the period and, if dilutive, the weighted-average number of potential shares of common shares.

Net loss per share attributable to common stockholders is calculated using the two-class method, which is an earnings allocation formula that determines net loss per share for the holders of the Company’s common shares and participating securities.

The Company’s convertible preferred stock contains participation rights in any dividend paid by the Company and is deemed to be a participating security.

The participating securities do not include a contractual obligation to share in losses of the Company and are not included in the calculation of net loss per share in the periods in which a net loss is recorded.

Diluted net loss per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method.

The Company allocates earnings first to preferred stockholders based on dividend rights and then to common and preferred stockholders based on ownership interests.

The weighted-average number of common shares included in the computation of diluted net loss per share gives effect to all potentially dilutive common equivalent shares.

Common stock equivalent shares are excluded from the computation of diluted net loss per share if their effect is antidilutive.

In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is antidilutive.

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

Diluted net loss per share is computed using the weighted-average number of common shares outstanding during the period, and if dilutive, the weighted-average number of potential common shares outstanding.

Potentially dilutive securities consist of stock options, restricted stock awards, and other common stock equivalents.

In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share is the same as basic net loss per share, as the inclusion of potentially dilutive common shares would be antidilutive.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholder’s deficit that result from transactions and events other than those with stockholders.

The Company’s unrealized gains and losses on marketable securities represent the only component of other comprehensive loss that are excluded from the reported net loss and that are presented in the consolidated statements of operations and comprehensive loss.

Comprehensive loss includes net loss as well as other changes in stockholder’s equity (deficit) that result from transactions and events other than those with stockholders.

The Company’s unrealized gains and losses on marketable securities represent the only component of other comprehensive gain that are excluded from the reported net loss and that are presented in the consolidated statements of operations and comprehensive loss.

Segment Information

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The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets.

The measure used by the CODM in assessing performance and deciding how to allocate resources is based on consolidated net loss, as reported on the consolidated statement of operations and comprehensive loss.

The CODM uses consolidated net loss to monitor budget versus actual results to identify deviations from expected results, which is used in assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods.

The measure used by the CODM in assessing

performance and deciding how to allocate resources is based on consolidated net loss, as reported on the consolidated statement of operations and comprehensive loss.

The CODM uses consolidated net loss, as reported in the consolidated statement of operations, to assess performance and allocate resources by evaluating operating results against expectations.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”).

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”).

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

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Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280:

Improvements to Reportable Segment Disclosures) (“ASU 2023-07”).

The amendments in this update improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses.

All disclosure requirements of the update are required for entities with a single reportable segment.

The Company has adopted this standard as of January 1, 2024.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740:

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ASU 2023-09 provides more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and incomes taxes paid information.

For public companies, the amendments are effective for annual periods beginning after

December 15, 2024, and should be applied prospectively.

The Company has determined that the effects of adopting the amendments in ASU 2023-09 will not have a material impact on its consolidated financial position, the results of its operations, or related disclosures when such amendment is adopted.

For public companies, the amendments were effective for annual periods beginning after December 15, 2024.

The Company adopted the amendments retrospectively for the year-ended December 31, 2025.

The adoption did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

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The Company is currently evaluating the effect of this update on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-07, Derivatives Scope Refinement , ("ASU 2025-07").

ASU 2025-07 creates a scope exception within ASC 815 for certain contracts with underlyings tied to a party's operations or activities (such as regulatory approval, clinical, or earnings milestones), which may cause some arrangements that previously met the derivative definition to no longer be accounted for as derivatives.

The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods.

Early adoption is permitted.

Entities may adopt prospectively for new or modified contracts after the adoption date, or modified retrospectively for contracts outstanding at adoption with a cumulative-effect adjustment to opening retained earnings.

The Company expects to adopt prospectively and does not expect a material impact, though this guidance may affect the accounting for future milestone-linked arrangements executed after adoption .

Marketable Securities

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Treasury securities $ 135,801 $ 263 $ — $ 136,064

Commercial paper 24,391 10 ( 5 ) 24,396

Corporate debt 11,813 3 ( 1 ) 11,815

Government agency securities 5,145 11 — 5,156

Total marketable securities, current

177,150 287 ( 6 ) 177,431

Marketable securities, noncurrent:

Treasury securities 55,793 208 — 56,001

Government agency securities 18,368 51 — 18,419

Total marketable securities, noncurrent

74,161 259 — 74,420

Total marketable securities

$ 251,311 $ 546 $ ( 6 ) $ 251,851

December 31, 2024

Amortized Cost Unrealized Gain Unrealized Loss Fair Value

Marketable securities, current:

Treasury securities $ 55,154 $ 176 $ — $ 55,330

Government agency securities 31,198 62 ( 1 ) 31,259

Corporate debt 17,205 22 — 17,227

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$ 129,887 $ 369 $ ( 1 ) $ 130,255

There were no unrealized gains or losses on marketable securities as of December 31, 2023.

The Company has determined that there were no material changes in the credit risk, therefore the Company has not recognized any allowance for credit losses on its debt securities.

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All other securities had a contractual maturity of less than a year.

There were no realized gains or losses during the year ended December 31, 2024 or 2023.

There were no realized gains or losses during the years ended December 31, 2025, or 2024.

Fair Value Measurements

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Money market funds $ 51,962 $ 51,962 $ — $ —

Commercial paper 5,988 — 5,988 —

Marketable securities:

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192,065 192,065 — —

Commercial paper 24,396 — 24,396 —

Government agency securities 23,575 — 23,575 —

Corporate debt 11,815 — 11,815 —

Commercial paper 5,934 — 5,934 —

Total financial assets $ 309,801 $ 244,027 $ 65,774 $ —

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Money market funds $ 37,288 $ 37,288 $ — $ —

Marketable securities:

Treasury securities

70,679 70,679 — —

Government agency securities 36,415 — 36,415 —

Corporate debt 17,227 — 17,227 —

Commercial paper 5,934 — 5,934 —

Total financial assets

During the year ended December 31, 2024 and 2023, there were no transfers or reclassifications between fair value measurement levels of assets or liabilities.

$ 167,543 $ 107,967 $ 59,576 $ —

During the year ended December 31, 2025, there were no transfers or reclassifications between fair value measurement levels of assets or liabilities.

The carrying values of prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

Deposits on lab and office equipment $ — $ 116

Laboratory equipment 1,461 1,329

Leasehold improvements $ 1,920 $ 1,854

Laboratory equipment 1,575 1,461

Furniture & fixtures 852 722

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Accrued expenses consisted of the following (in thousands):

Accrued research and development $ 3,961 $ 3,065

Accrued compensation and benefits $ 4,740 $ 2,972

Accrued research and development 4,305 3,961

Accrued professional fees 522 737

Accrued deferred offering costs 492 —

Accrued other 101 —

Accrued deferred offering costs — 492

Total accrued expenses $ 9,668 $ 8,162

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The Company was not relieved of its obligation to the lessor for the head lease as a result of its entry into the Sublease.

The Sublease is classified as an operating lease and commenced in July 2023 and will expire in September 2025.

The Sublease has escalating rent payments and is secured by a letter of credit of $0.1 million w ith the Company named as the beneficiary.

Sublease income is recognized on a straight-line basis and the rental income and reimbursement for operating expenses and taxes is included in other income on the consolidated statements of operations and comprehensive loss.

The Sublease is classified as an operating lease and commenced in July 2023 and expired in August 2025.

Sublease income was recognized on a straight-line basis.

For the years ended December 31, 2025 and 2024, the Company recognized $ 0.4 million and $ 0.7 million, respectively, of sublease income within other income on the consolidated statements of operations and comprehensive loss.

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Variable lease costs 627 513

Short-term lease costs — 88

Total lease cost $ 2,589 $ 2,475

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Year ended December 31,

Thereafter 2,245

Total future minimum lease payments 11,394

Less imputed interest ( 2,717 )

Present value of operating lease liabilities $ 9,749

Present value of operating lease liability $ 8,677

Commitments and Contingencies

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Other Contracts

The Company is party to various contracts with CROs and CDMOs that generally provide for termination on notice, with the exact amounts in the event of termination to be based on the timing of the termination and the terms of the agreement.

The Company is party to various contracts with CROs and CDMOs in the ordinary course of business.

These agreements generally provide for termination at any time upon a certain amount of prior notice.

Payments upon termination, if any, are based on the timing of the termination and the terms of the agreement.

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 arising out of the relationship between such parties and the Company.

In addition, the Company has entered into

indemnification agreements with members of its board of directors and senior management 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.

In addition, the Company has entered into indemnification agreements with members of its board of directors and senior management 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 however, the Company has not incurred any material costs as a result of such indemnifications nor experienced any losses related to them.

To date the Company has not incurred any material costs as a result of such indemnifications nor experienced any losses related to them.

As of December 31, 2025 and 2024, the Company was not aware of any claims under indemnification arrangements and it has not accrued any liabilities related to such obligations.

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Sanofi License Agreement

In December 2019, the Company entered into a license agreement, which has been subsequently amended (as amended, the “Sanofi License Agreement”), with Sanofi SA (f/k/a Genzyme) (“Sanofi”), pursuant to which the Company has been granted an exclusive, sub-licensable, royalty-bearing, worldwide license to develop and commercialize products using the licensed compounds and know-how for cystic fibrosis transmembrane conductance regulator (“CFTR”) correctors.

to which the Company has been granted an exclusive, sub-licensable, royalty-bearing, worldwide license to develop and commercialize products using the licensed compounds and know-how for CFTR correctors.

As initial consideration for the license, the Company paid a non-refundable, upfront payment of $ 1.5 million, as well as a reimbursement of $ 0.3 million for Sanofi’s research and development expenses, which was previously recorded as research and development expense because the acquired license represented in-process research and development with no alternative future use.

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In addition, the Company is required to pay CFF a total of up to $ 40.0 million upon achievement of certain late-stage developmental and commercial milestones.

In conjunction with the execution of the agreements with Sanofi and CFF in December 2019, a side letter was executed between the Company and Sanofi, which clarifies the relationship between the Company, Sanofi and CFF, under which the Company is obligated to pay Sanofi 20 % of the milestones it would have been obligated to pay CFF, net of the milestone amounts it is obligated to pay under the Sanofi License Agreement.

As of December 31, 2025, no milestones have been achieved.

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Such milestone and royalty payments shall be reduced for products covered by derived patents.

Further, a side letter was executed between the Company and Sanofi, which clarifies the relationship between the Company, Sanofi and CFF, under which the Company is obligated to pay Sanofi 20% of the milestones it would have been obligated to pay CFF, net of the milestone amounts it is obligated to pay under the Sanofi License Agreement.

AbbVie Agreement

In July 2024, the Company entered into a license agreement (the “AbbVie License Agreement”) with AbbVie Global Enterprises Ltd.

(“AbbVie”), pursuant to which the Company has been granted an exclusive worldwide, royalty-bearing, sublicensable license to research, develop and commercialize certain CFTR

(“AbbVie”), pursuant to which the Company has been granted an exclusive worldwide, royalty-bearing, sublicensable license to research, develop and commercialize certain CFTR compounds.

The licensed rights are directed, among other things, to three clinical-stage CFTR modulator assets.

The license granted to us under the AbbVie License Agreement is subject to certain preexisting rights held by AbbVie and Galapagos NV (“Galapagos”).

In particular, certain of the licensed patents and other intellectual property rights were developed by or on behalf of Galapagos and are sublicensed to us subject to the terms of the second amended and restated collaboration agreement between Galapagos and AbbVie in October 2018 (the “Galapagos License Agreement”), as amended by a side letter between Galapagos and AbbVie in July 2024.

The license granted under the AbbVie License Agreement are subject to certain preexisting rights held by AbbVie and Galapagos NV (“Galapagos”).

In particular, certain of the licensed patents and other intellectual property rights were developed by or on behalf of Galapagos and are sublicensed to the Company subject to the terms of the second amended and restated collaboration agreement between Galapagos and AbbVie in October 2018 (the “Galapagos License Agreement”), as amended by a side letter between Galapagos and AbbVie in July 2024.

As initial consideration for the license, the Company paid a non-refundable, upfront payment of $ 5.0 million and issued shares of its common stock with a fair value of $ 8.6 million to AbbVie .

The Company determined that the AbbVie License Agreement represented an asset acquisition as it did not meet the definition of the business.

The Company recorded the total initial consideration of $13.6 million as research and development expense during the year ended December 31, 2024, because the acquired license represented in-process research and development with no alternative future use.

The Company previously recorded the total initial consideration of $ 13.6 million as research and development expense, because the acquired license represented in-process research and development

with no alternative future use.

In addition, the Company is required to pay AbbVie a total of up to $ 360.0 million upon achievement of certain development and commercial milestones, consisting of up to $ 70.0 million in late-stage development milestones and up to $ 290.0 million in commercial milestones.

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There were no material issuance costs incurred related to this financing.

In June 2020, upon the Board’s approval, the Company issued an additional 1,201,202 shares of Series Seed Preferred Stock to an additional investor at $3.33 per share for gross proceeds of $4.0 million.

In June 2020, the Company issued an additional 1,201,202 shares of Series Seed Preferred Stock to an additional investor at $ 3.33 per share for gross proceeds of $ 4.0 million.

The Company incurred $ 38,887 of issuance costs in connection with this issuance.

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The Company incurred $ 0.5 million of issuance costs in connection with the Series C Financing.

Upon the issuance of Series Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (the “Preferred Stock”), the Company assessed the embedded conversion and liquidation features of the shares and determined that the Company was not required to separately account for these features.

Preferred Stock consists of the following (in thousands, except share amounts):

December 31, 2024

Preferred Stock Authorized

Preferred Stock Issued and Outstanding

Carrying Value

Liquidation Value

Stock Issuable Upon Conversion

Series Seed Preferred Stock 3,963,963 3,963,963 $ 13,014 $ 13,200 2,712,998

Series A Preferred Stock 5,704,161 5,704,161 25,235 25,263 3,904,017

Series B Preferred Stock 11,370,621 11,370,621 110,791 111,000 7,782,230

Series C Preferred Stock 18,628,970 18,628,970 181,328 181,856 12,749,961

Total 39,667,715 39,667,715 $ 330,368 $ 331,319 27,149,206

December 31, 2023

Preferred Stock Authorized

Preferred Stock Issued and Outstanding

Carrying Value

Liquidation Value

Stock Issuable Upon Conversion

Series Seed Preferred Stock 3,963,963 3,963,963 $ 13,014 $ 13,200 2,712,998

Series A Preferred Stock 5,704,161 5,704,161 25,235 25,263 3,904,017

Series B Preferred Stock 11,370,621 11,370,621 110,791 111,000 7,782,230

Total 21,038,745 21,038,745 $ 149,040 $ 149,463 14,399,245

The holders of Preferred Stock have the following rights, preferences and privileges:

Voting Rights

The holders of each series of Preferred Stock are entitled to vote on all matters and shall have the number of votes equal to the number of shares of common stock into which the Preferred Stock is convertible.

Dividends shall be payable only when, as, and if declared by the Board of Directors, and the Company shall be under no obligation to pay any dividends.

The Company shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock unless the Preferred Stockholders then outstanding first receive the dividend amounts calculated based upon the dividend on the class or series of capital stock that would result in the highest Preferred Stock dividend.

Liquidation Preference

The holders of the Preferred Stock have first preference in the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, including a merger or sale of the Company.

The amount to be paid is equal to greater of the Series C Preferred Stock original issue price in the case of the Series C Preferred Stock, Series B Preferred Stock original issue price in the case of the Series B Preferred Stock, the Series A Preferred Stock original issue price in the case of the Series A Preferred Stock, and the Series Seed Preferred Stock original issue price in the case of the Series Seed Preferred Stock, plus any dividends declared

but unpaid thereon, or such amount per share as would have been payable had all shares of the Preferred Stock been converted into common stock.

The Preferred Stock does not have redemption rights, except for the contingent redemption upon the occurrence of a liquidation event, which would constitute a merger or consolidation, or the sale, lease, transfer, exclusive license, or other disposition, of all or substantially all of the Company’s or its subsidiaries assets.

Each share of Preferred Stock shall be convertible, at the option of the holder (without payment) into common stock as determined by dividing the Preferred Stock’s original issue price by the conversion price in effect at the time of conversion.

The Series C Preferred Stock and Series B Preferred Stock conversion price shall initially be equal to $9.762, the Series A Preferred Stock conversion price shall initially be equal to $4.4289, and the Series Seed Preferred Stock conversion price shall initially be equal to $3.33.

In the event of a liquidation, dissolution or winding up of the Company or a Deemed Liquidation Event, the conversion right shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Preferred Stock.

All shares of Preferred Stock automatically converted into shares of common stock on a 1-to-1.4611 basis in connection with the Company's IPO in February 2025 (see Note 1).

The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preference of the holders of the Preferred Stock set forth in Note 10 above.

The number of shares of common stock that have been reserved for the potential conversion of preferred stock, exercise of stock options, and vesting of restricted common stock is as follows:

Upon issuance of the Series Seed, Series A, Series B, and Series C convertible preferred stock (collectively, the “Preferred Stock”), the Company evaluated the embedded conversion and liquidation features and determined that separate accounting was not required.

Upon completion of the Company’s IPO, all outstanding shares of convertible preferred stock automatically converted into shares of common stock.

As of December 31, 2025, no shares of convertible preferred stock were outstanding.

The Board of Directors of the Company (the “Board”) is authorized to issue up to 10,000,000 shares of preferred stock and may fix the price, rights, preferences, privileges, and restrictions of the preferred stock without any further vote or action by our stockholders.

The Board may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of common stock.

As of December 31, 2025, the Company had no shares of preferred stock issued or outstanding and preferred stock is classified within stockholders’ equity.

Common Stock & Equity Incentive Plans

Common Stock Rights

The holders of the Company’s common stock are entitled to one vote per share on all matters submitted to a vote of stockholders, subject to applicable law.

The holders of common stock are also entitled to receive dividends, if any, as may be declared by the Company’s board of directors, and to share ratably in the Company’s assets legally available for distribution upon liquidation, dissolution, or winding up of the Company.

Equity Incentive Plans

2020 Stock Option and Grant Plan

The Company’s 2020 Stock Option and Grant Plan, as amended (the “2020 Plan”), previously provided for the Company to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the Board and consultants of the Company.

The 2020 Plan was administered by the Board.

As of December 31, 2025, no shares of common stock remained available for future grants under the 2020 Plan.

Outstanding stock options and restricted common stock awards granted under the 2020 Plan generally vest over four years and expire ten years after the date of grant, and certain awards provide for accelerated vesting upon a change in control.

2025 Stock Option and Grant Plan

In January 2025, the Board of Directors and the Company’s stockholders adopted and approved the 2025 Equity Incentive Plan (the “2025 Plan”), which became effective on February 5, 2025, immediately prior to the effectiveness of the Company’s registration statement on Form S-1 for its IPO.

The 2025 Plan initially reserved 5,060,000 shares of common stock for issuance and includes an evergreen provision pursuant to which the number of shares reserved for issuance may be automatically increased on an annual basis.

Beginning in 2026, the number of shares reserved under the 2025 Plan shall automatically increase annually on January 1 by up to 4 % of the total number of shares of common stock outstanding, unless the Board of Directors determines otherwise.

The shares reserved for issuance under the 2020 Stock Option and Grant Plan ceased to be available for issuance upon the effectiveness of the 2025 Plan.

Any shares subject to outstanding awards under the 2020 Plan that subsequently expire, are forfeited, cancelled, repurchased, or withheld will become available for issuance under the 2025 Plan.

As of December 31, 2025, 2,393,345 shares of common stock remained available for future grants under the 2025 Plan.

Outstanding stock options and restricted common stock awards granted under the 2025 Plan generally vest over four years and expire ten years after the date of grant, and certain awards provide for accelerated vesting upon a change in control.

2025 Employee Stock Purchase Plan

In January 2025, the Board of Directors and the Company’s stockholders adopted and approved the 2025 Employee Stock Purchase Plan (the “2025 ESPP”), which became effective on February 5, 2025, immediately prior to the effectiveness of the Company’s registration statement on Form S-1 for its IPO.

The 2025 ESPP initially reserved 390,127 shares of common stock for issuance and includes an evergreen provision pursuant to which the number of shares reserved for issuance may be automatically increased on an annual basis.

Beginning in 2026, the number of shares reserved under the 2025 Plan shall automatically

increase annually on January 1 by up to 1 % of the total number of shares of common stock outstanding, unless the Board of Directors determines otherwise, but not to exceed 780,254 shares.

As of December 31, 2025, no offering periods had commenced under the 2025 ESPP.

Shares Reserved for Issuance

The number of shares of common stock reserved for issuance under the Company's equity incentive plans is as follow:

Year Ended December 31,

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Stock-Based Compensation

2020 Stock Option and Grant Plan

The Company’s 2020 Stock Option and Grant Plan, as amended (the “2020 Plan”), provides for the Company to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the Board and consultants of the Company.

The 2020 Plan is administered by the Board, or at the discretion of the Board, by a committee of the Board.

The exercise prices, vesting and other restrictions are determined at the discretion of the Board, or their 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 total number of shares of common stock that may be issued under the 2020 Plan is 6,067,289 shares, of which 1,035,891 remained available for future grant as of December 31, 2024.

Vesting periods are determined at the discretion of the Board.

Stock options and restricted common awards granted to-

date typically vest over four years.

Certain stock options and restricted common awards are subject to accelerated vesting upon a change in control, as defined in the respective grant agreements.

If a restricted common stockholder ceases to have a business relationship with the Company, the Company may repurchase any unvested shares of common stock held by these individuals at their original purchase price.

The unvested shares of common stock are not considered outstanding shares for accounting purposes and are recorded as a liability until the shares vest.

Accordingly, the common stock outstanding as reported on the consolidated statement of convertible preferred stock and stockholder's deficit excludes unvested restricted common stock as of each reporting date.

Restricted Common Stock

A summary of the Company’s restricted common stock activity during the year ended December 31, 2025, is presented below:

Number of Restricted Shares

Weighted-Average Per-Share Grant-Date Fair Value

Number of Restricted Shares Weighted-Average Per-Share Grant-Date Fair Value

Unvested at December 31, 2024 75,958 $ 0.78

Vested (186,191) $0.78

( 75,958 ) $ 0.78

Unvested at December 31, 2025 — $ —

2 unchanged sentences

The aggregate fair value of restricted common stock awards that vested during the years ended December 31, 2025 and 2024, was $ 1.0 million and $ 1.3 million, respectively.

The final vesting conditions for the restricted common stock awards were met in June 2025.

Stock Option Valuation

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Stock Option Activity

The following table summarizes the Company’s stock option activity under the 2020 Plan for the year ended December 31, 2024:

The following table summarizes the Company’s common stock option activity for the year ended December 31, 2025:

Number of Shares

18 unchanged sentences

Total $ 12,066 $ 3,708

As of December 31, 2024, there was $9.8 million of unrecognized stock-based compensation expense that is expected to be recognized over a weighted average period of 2.7 years that is related to unvested stock options.

As of December 31, 2024, the unrecognized stock-based compensation expense for restricted common stock awards is de minimis.

The Company had no federal or state income tax expense due to operating losses incurred for the years ended December 31, 2024 and 2023.

A reconciliation of income tax expense (benefit) from continuing operations to the amount computed by applying the statutory federal income tax rate to the net loss from continuing operations is summarized as follows:

As of December 31, 2025, there was $ 35.3 million of unrecognized stock-based compensation expense for common stock option awards that are expected to be recognized over a weighted-average period of 2.6 years.

The stock-based compensation expense for restricted common stock awards was de minimis and fully recognized as of June 30, 2025, when the final vesting conditions were met.

The Company’s loss is attributable to domestic activity, and the Company does not have foreign operations.

The Company had no current or deferred federal or state income tax expense due to operating losses incurred for the years ended December 31, 2025 and 2024, and the full valuation allowance recorded on net deferred tax assets.

Year Ended December 31,

Tax expense (benefit) at the statutory rate 21.0 % 21.0 %

State income taxes, net of federal benefit 6.0 % 6.3 %

Tax expense (benefit) at the U.S.

statutory rate $ ( 15,806 ) 21.0 % $ ( 12,954 ) 21.0 %

State income taxes, net of federal income tax effect (1)

Effects of changes in tax laws or rates enacted in the current period — — % — — %

Research and development tax credits ( 1,969 ) 2.6 % ( 1,452 ) 2.4 %

Nontaxable or nondeductible Items

Stock-based compensation ( 1,371 ) 1.8 % 304 ( 0.5 %)

Limitations on executive compensation 1,068 ( 1.4 %) — — %

Other permanent differences ( 54 ) 0.1 % 25 — %

Changes in tax rates (1.2 %) 0.7 %

Tax credits 3.0 % 2.4 %

Other adjustments ( 43 ) 0.1 % — — %

Change in valuation allowance 18,175 ( 24.2 %) 14,077 ( 22.9 %)

Effective tax rate $ — 0.0 % $ — 0.0 %

(1) State taxes in Massachusetts make up the majority of the tax effect in this category.

The components of the Company’s deferred tax assets and liabilities are comprised of the following (in thousands):

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The Company reevaluates the positive and negative evidence at each reporting period.

The Company’s valuation allowance increased during 2024 by approximately $17.3 million, primarily due to the capitalization of research and experimental expenditures and the increase in net operating loss and tax credit carryforwards.

The Company’s valuation allowance increased during 2025 by approximately $ 24.5 million, primarily due to the increase in net operating loss and tax credit carryforwards.

Under the provision of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.

operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative change in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Section 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions.

Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative change in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Section 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions.

This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities.

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The minimum threshold is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position.

The Company didn’t have any unrecognized tax benefits as of December 31, 2024 or 2023, respectively.

The Company does not expect its unrecognized tax benefits to change significantly over the next year.

Realization of the future tax benefits is dependent on the many factors, including the Company’s ability to generate taxable income.

The Company did no t have any unrecognized tax benefits as of December 31, 2025 or 2024, respectively.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

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(1) External research and development expenses consist primarily of costs paid to third-parties including CROs, CDMOs, consultants, advisors and lab-related vendors.

(2) Fees paid to licensors consists primarily of upfront and annual licensing fees paid pursuant to our license agreements (Note 9).

The fair value of equity issued pursuant to the AbbVie License Agreement (Note 9) is included in other segments items.

(3) General corporate and facility expenses consists primarily of professional services fees for legal, finance, human resources, in addition to information technology expenses and rent expense, net of sublease income.

(4) Other segment items consists primarily of interest income partially offset by non-cash expenses such as stock-based compensation, depreciation, the fair value of equity issued pursuant to the AbbVie License Agreement (Note 9), and amortization of discounts and premiums on marketable securities.

(2) Fees paid to licensors consists primarily of upfront and annual licensing fees paid pursuant to the Company's license agreements.

(3) General corporate and facility expenses consists primarily of professional services fees for legal, finance, human resources, medical affairs in addition to information technology expenses and rent expense, net of sublease income.

(4) Other segment items consists primarily of interest income, partially offset by taxes and non-cash expenses, such as stock-based compensation, depreciation, the fair value of equity issued pursuant to the AbbVie License Agreement (Note 9) recognized in 2024, and amortization of discounts and premiums on marketable securities.

Net Loss Per Share

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Company contributions to the plan may be made at the discretion of the Board.

For the years ended December 31, 2024 and 2023, no contributions have been made to the plan by the Company.

Subsequent Events

Except for the matters discussed below and in Note 1 the Company has concluded that there are no additional subsequent events that occurred after December 31, 2024, through the date of issuance of this Annual Report.

2025 Equity Plans

In January 2025, the Board and the Company's stockholders adopted and approved the 2025 Stock Option and Incentive Plan (the "2025 Plan"), which became effective on February 5, 2025, the date immediately preceding the date that the registration statement on Form S-1 for the Company's IPO was declared effective by the SEC.

The 2025 Plan initially reserved 5,060,000 shares of common stock for future issuances and is subject to automatic increases in the number of shares of common stock reserved for future issuances in accordance with the evergreen provisions in the 2025 Plan.

The shares reserved for future issuance under the 2020 Plan ceased to be available for issuance at the time the 2025 Plan became effective.

Any shares underlying outstanding stock awards granted under the 2020 Plan that subsequently expire or are repurchased, forfeited, cancelled, or withheld will return to the 2025 Plan and be reserved and available for issuance.

The Company granted 1,946,388 of common stock options subject to service-based vesting to certain executive officers, directors, and employees at the time of effectiveness of the 2025 Plan with an exercise price equal to $18.00 per share.

In January 2025, the Board and the Company's stockholders adopted and approved the 2025 Employee Stock Purchase Plan (the "2025 ESPP"), which became effective on February 5, 2025, the date immediately preceding the date that the registration statement on Form S-1 for the Company's IPO was declared effective by the SEC.

The 2025 ESPP initially reserved 390,127 shares of common stock for future issuance and is subject to automatic increases in the number of shares of common stock reserved for future issuances in accordance with the evergreen provisions in the 2025 ESPP.

For the year ended December 31, 2025 the Company contributed $ 0.2 million to the plan, no contributions were made for year ended December 31, 2024.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data