What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-12 · 108 added, 71 removed, 284 unchanged (39% of the section changed)

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We are developing obexelimab as a potential I&I franchise for patients in several autoimmune diseases, representing substantial commercial opportunities individually and in the aggregate.

The first three indications we are pursuing include IgG4-RD through an ongoing registration-directed Phase 3 trial (the “INDIGO” trial), and relapsing multiple sclerosis (“RMS”) (the “MoonStone” trial) and systemic lupus erythematosus (“SLE”) (the “SunStone” trial) through ongoing Phase 2, double-blind, randomized, placebo-controlled trials.

The first three indications we are pursuing include IgG4-RD through an ongoing registration-directed Phase 3 trial (the “INDIGO” trial), systemic lupus erythematosus (“SLE”) through an ongoing Phase 2, double-blind, randomized, placebo-controlled trial (the “SunStone” trial), and relapsing multiple sclerosis (“RMS”) through an ongoing Phase 2, double-blind, randomized, placebo-controlled trial (the “MoonStone” trial).

On October 27, 2025, we announced topline data from the MoonStone trial.

Obexelimab met the primary endpoint, demonstrating a statistically significant 95% relative reduction in the cumulative number of new gadolinium-enhancing T1 hyperintense lesions, which are markers of active inflammation, over week 8 and week 12 compared with placebo (p=0.0009).

The Company expects to report 24-week data from the MoonStone trial in the first quarter of 2026, which will include additional secondary and exploratory endpoints.

The 24-week data from additional secondary and exploratory endpoints may inform obexelimab’s potential impact on disability progression and help the Company determine next steps for future development of obexelimab in RMS.

In the fourth quarter of 2024, we completed the target enrollment of the INDIGO trial and expect to report topline results from the INDIGO trial around year-end 2025.

In the second quarter of 2025, we completed enrollment of the MoonStone trial and expect to report results from the MoonStone trial, including the 12-week primary endpoint results, early in the fourth quarter of 2025.

We expect to complete enrollment in the SunStone trial by year-end 2025 and to report topline results from the SunStone trial in mid-2026.

Beyond our lead product candidate, obexelimab, we have two other programs for the potential treatment of other I&I indications that we may continue to advance and ultimately commercialize with partners.

If the topline results are positive, we expect to file a Biologics License Application (“BLA”) with the U.S.

Food and Drug Administration (“FDA”) in the first half of 2026, followed by a Marketing Authorization Application with the European Medicines Agency (“EMA”), and, if approved, commence the commercial launch initially in the U.S.

and then in Europe.

We expect to report topline results from the SunStone trial in mid-2026.

Based on the outcome of the SunStone trial, and considering other factors, we may initiate a Phase 3 program in patients with SLE in the first half of 2027.

On October 7, 2025, we entered into a License Agreement with InnoCare Pharma Inc.

pursuant to which we were granted exclusive rights to develop, manufacture, and commercialize orelabrutinib, a Bruton’s Tyrosine Kinase inhibitor (“BTK”),

for multiple sclerosis worldwide, and in all non-oncology indications worldwide excluding mainland China, Hong Kong, Macau and Taiwan (“Greater China”), and Brunei, Burma, Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam (“Southeast Asia”), as well as two early-development product candidates:

ZB021, an IL-17AA/AF inhibitor, in all fields of use worldwide excluding Greater China and Southeast Asia, and ZB022, a TYK2 inhibitor, in all fields of use worldwide.

Orelabrutinib is a highly selective and central nervous system (“CNS”)-penetrant, oral small molecule BTK inhibitor.

Orelabrutinib is designed to bind irreversibly to BTK with minimal off-target effects, which may potentially reduce certain side effects.

We believe orelabrutinib is designed to efficiently cross the blood-brain barrier, reaching therapeutic levels within the CNS to directly target inflammation in diseases like MS.

In September 2025, the Phase 3 clinical trial of orelabrutinib in patients with Primary Progressive Multiple Sclerosis (“PPMS”) was initiated.

The Phase 3 trial of orelabrutinib in patients with PPMS is a global, multicenter, randomized, double-blind, placebo-controlled clinical trial evaluating the safety and efficacy of orelabrutinib dosed 80 mg once daily (“QD”) compared to placebo in patients with PPMS, with a primary endpoint of time to onset of 12-week composite confirmed disability progression (“cCDP”).

In the first quarter of 2026, we plan to initiate a second global, Phase 3, multicenter, randomized, double-blind, placebo-controlled clinical trial evaluating orelabrutinib dosed 80 mg QD compared to placebo in patients with Secondary Progressive Multiple Sclerosis (“SPMS”), with a primary endpoint of time to onset of 24-week CDP.

ZB021 is an oral IL-17AA/AF inhibitor designed to block both IL-17AA homodimer and IL-17AF heterodimer signaling.

Preclinical studies for ZB021 have shown favorable PK and ADME properties.

ZB021 achieved comparable activity in vivo to a reference anti-IL-17 biologic in a rat CIA model.

Subject to the results of Investigational New Drug (“IND”)-enabling studies, we expect to submit an IND application for ZB021, and if cleared, initiate a Phase 1 clinical study in 2026.

ZB022 is an oral, brain-penetrant TYK2-JH2 inhibitor, currently in IND-enabling studies.

Subject to the results of IND-enabling studies, we expect to submit an IND application for ZB022, and if cleared, initiate a Phase 1 clinical study in 2026.

Beyond our lead product candidates, we have two other programs for the potential treatment of other I&I indications that we may continue to advance and ultimately commercialize with partners.

These consist of ZB002 and ZB004.

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In addition, the Company is eligible to receive up to $96.0 million upon the achievement of certain future development and commercial milestones and royalty percentage rates from the low to mid-single digits, net of pass-through obligations due to Viridian.

On September 2, 2025, the Company and Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) entered into the Revenue Participation Right Purchase and Sale Agreement (the “Royalty Purchase Agreement”), pursuant to which

Royalty Pharma purchased the right to receive, for each calendar quarter, (i) 5.5% of net sales of obexelimab products sold by Zenas and its affiliates worldwide, (ii) 5.5% of net sales of obexelimab products sold by licensees of Zenas and its affiliates in the U.S., the United Kingdom and the European Union, (iii) 25% of royalty income payable to Zenas or any of its affiliates on sales of obexelimab products in countries other than the U.S., the United Kingdom, and in the European Union by its licensees pursuant to out-licenses less royalty payments payable by Zenas to Xencor Inc.

and (iv) 25% of non-royalty income attributable to obexelimab products payable to Zenas or any of its affiliates by its licensees (other than certain milestone payments payable by Bristol-Myers Squibb) pursuant to out-licenses and allocated to countries other than the U.S., the United Kingdom and in the European Union.

Since inception, our operations have focused on research and development activities with respect to our product candidates as described above, as well as raising capital, business planning, organizing and staffing our company, establishing our intellectual property portfolio, establishing arrangements with third parties for the manufacture of our product candidates and related raw materials, and providing general and administrative support for these operations.

Through June 30, 2025, we have financed our operations primarily with the proceeds from the issuance of convertible preferred stock, our convertible notes, payments received under our license and collaboration agreements and from the sale of common stock in our IPO completed in September 2024.

Through September 30, 2025, we have financed our operations primarily with the proceeds from the issuance of convertible preferred stock, our convertible notes, payments received under our license and collaboration agreements and from the sale of common stock in our IPO completed in September 2024.

Additionally, on October 9, 2025, we closed our private investment in public equity (“PIPE”) of 6,311,030 shares of common stock for gross proceeds of approximately $120.0 million, before deducting placement agent fees and other expenses.

We have incurred significant operating losses and negative cash flows since inception.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates.

Our net losses for the three and six months ended June 30, 2025 and 2024, were $52.2 million and $38.0 million, respectively.

As of June 30, 2025, we had an accumulated deficit of $473.2 million.

Our net losses for the three and nine months ended September 30, 2025 were $51.5 million and $137.3 million, respectively, and we recorded net loss of $38.6 million and $104.4 million, for the three and nine months ended September 30, 2024.

As of September 30, 2025, we had an accumulated deficit of $524.7 million.

We expect to continue to incur significant and increasing losses for the foreseeable future.

We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

● continue clinical development of obexelimab and our other programs;

● advance our obexelimab program and our other product candidates through preclinical development and clinical trials;

● continue clinical development of obexelimab, orelabrutinib and our other programs;

● advance our obexelimab and orelabrutinib programs and our other product candidates through preclinical development and clinical trials;

● identify additional product candidates and acquire rights from third parties to those product candidates through licenses or acquisitions and conduct development activities, including preclinical studies and clinical trials;

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If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of June 30, 2025, we had $274.9 million in cash, cash equivalents and investments.

We believe that our cash, cash equivalents and investments as of June 30, 2025 will be sufficient to fund our operations and capital expenditure requirements into the fourth quarter of 2026.

We had $301.6 million in cash, cash equivalents and investments as of September 30, 2025.

Based on our current operating plans, including $120.0 million of gross proceeds from the PIPE received in October 2025 ( Note 16, Subsequent Events ), we expect that our existing cash, cash equivalents and investments will be sufficient to fund our capital and operating expenditures into the fourth quarter of 2026, however it will not be sufficient to fund our operations and capital expenditure requirements for at least twelve months from the date our condensed consolidated financial statements are issued and accordingly have concluded that there is substantial doubt with respect to our ability to continue as a going concern.

Our financial statements do not include any adjustments or changes in classification of assets or liabilities that may result from our possible inability to continue as a going concern.

However, we expect to finance our operations through private or public equity financing, debt financing or other capital resources.

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

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The current geopolitical, trade, regulatory and economic environment, including, but not limited to the imposition of new tariffs or increases in tariff rates and other trade measures, may materially affect our business and operating results by increasing the costs of our clinical trial materials and supplies, which in turn increase our overhead costs.

Additionally,

the ongoing recession risk together with the foregoing, could result in further economic uncertainty and volatility in the capital markets in the near term and, as a result could negatively affect our operations.

Additionally, the ongoing recession risk together with the foregoing, could result in further economic uncertainty and volatility in the capital markets in the near term and, as a result could negatively affect our operations.

Furthermore, such economic conditions have produced downward pressure on share prices.

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Research and Development Expenses

Research and development expenses account for a significant portion of our operating expenses and consist primarily of external and internal costs incurred in connection with the preclinical and clinical development of obexelimab, ZB002, ZB004, ZB001 and ZB005, and include:

Direct Costs:

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Research and development activities are central to our business model.

We expect that our research and development expenses will continue to increase for the foreseeable future as we advance clinical trials for our product candidates, pursue additional indications, continue to develop additional product candidates, expand our headcount and maintain, expand and

enforce our intellectual property portfolio.

We also expect our manufacturing costs to increase with our CMOs as we scale up our processes for commercial manufacturing.

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This is due to the numerous risks and uncertainties associated with product development, including the uncertainty of:

● the scope, timing and progress of our ongoing obexelimab clinical studies and other research and development activities associated with the development of our other and future product candidates;

● the scope, timing and progress of our ongoing clinical studies and other research and development activities associated with the development of our current and future product candidates;

● the number and scope of preclinical and clinical programs we decide to pursue;

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● the timing of and successful patient enrollment in, and the initiation and completion of, clinical trials;

● the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the U.S.

Food and Drug Administration (“FDA”), or any comparable foreign regulatory authority;

● the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA, or any comparable foreign regulatory authority;

● the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;

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● the costs and timing of establishing or securing sales and marketing capabilities for our product candidates if approved;

and restrictions on currency exchange or the transfer of funds, particularly new or increased tariffs imposed on imports, and as a result supply-related costs, from countries where our suppliers operate, as well as tariffs that impact the biopharmaceutical industry generally;

● the imposition of new laws and regulations, including those relating to labor conditions and safety standards, information and data transfer, imports, duties, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds, particularly new or increased tariffs imposed on imports, and as a result supply-related costs, from countries where our suppliers operate, as well as tariffs that impact the biopharmaceutical industry generally;

● our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;

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Any changes in the outcome of any of these variables with respect to the development of our current product candidates or any future product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates.

For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently anticipate would be required for the completion of clinical development, or if we experience significant delays in enrollment in any clinical trials following the FDA’s acceptance and clearance of an Investigational New Drug Application (“IND”), we could be required to expend significant additional financial resources and time to complete clinical development than we currently expect.

For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently anticipate would be required for the completion of clinical development, or if we experience significant delays in enrollment in any clinical trials following the FDA’s acceptance and clearance of an IND, we could be required to expend significant additional financial resources and time to complete clinical development than we currently expect.

We may never obtain regulatory approval for any product candidates that we develop.

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We will also incur pre-commercialization expenses to facilitate commercial readiness, if a product candidate is approved.

Acquired In-Process Research and Development Expense

We expense acquisition costs for assets purchased for use in research and development activities that have no alternative future use as in-process research and development (“IPR&D”) expenses as of the acquisition date.

When we become obligated to make contingent milestone payments under the terms of the agreements by which we acquired the IPR&D assets, we will recognize additional IPR&D expense.

We measure and recognize contingent consideration in the period in which the related milestone is achieved and becomes payable.

Total Other Income (Expense), Net

Other Income (Expense), Net

Other income (expense), net primarily consists of interest income generated from cash equivalents and investments and realized and unrealized gains and losses on foreign currency transactions.

Other income (expense), net primarily consists of interest income generated from cash equivalents and investments and realized and unrealized gains and losses on foreign currency transactions and interest expense related to our royalty obligation.

Since our inception, we have not recorded income tax benefits for any of our deferred tax assets, including the net operating losses (“NOLs”) incurred or the research and development tax credits generated in each year, as we have concluded that it is more likely than not that these deferred tax assets will not be realized.

Results of Operations

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

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

The following table summarizes our results of operations for each of the periods presented (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

Increase (Decrease)

License and collaboration revenue

Total revenue

Operating expenses:

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General and administrative

Acquired in-process research and development

Total operating expenses

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Other income (expense), net:

Fair value adjustments to convertible notes

Other income, net

Total other income (expense), net

Loss before income taxes

Income tax benefit

We did not recognize any license and collaboration revenue for the three months ended June 30, 2025 and 2024.

Research and Development Expenses

The following table summarizes our research and development expenses for each of the periods presented (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

Increase (Decrease)

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Total research and development expenses

Research and development expenses were $43.0 million for the three months ended June 30, 2025, compared to $33.8 million for the three months ended June 30, 2024.

The increase of $9.2 million was primarily attributable to the following:

● a $7.1 million increase in costs related to the development of obexelimab, our lead product candidate, driven by a $5.5 million increase in manufacturing costs for clinical trial materials and a $1.0 million increase in clinical trial costs;

● a $2.6 million decrease in costs related to our partnered regional programs, including a $1.8 million decrease related to ZB005 and an $0.8 million decrease related to ZB001, as a result of transitioning these programs to Tenacia and Zai Lab, respectively;

Research and development expenses were $34.4 million for the three months ended September 30, 2025, compared to $33.5 million for the three months ended September 30, 2024.

The increase of $0.9 million was primarily attributable to

the following:

● a $0.6 million decrease in costs related to the development of obexelimab, our lead product candidate, primarily driven by a $3.6 million decrease in manufacturing costs for clinical trial materials and partially offset by a $2.8 million increase in clinical trial and regulatory costs;

● a $2.2 million decrease in costs related to our partnered regional programs, including a $1.9 million decrease related to ZB005 and a $0.3 million decrease related to ZB001, as a result of transitioning these programs to Tenacia and Zai, respectively;

● a $3.4 million increase in personnel costs, including a $2.2 million increase in salary and benefit related expense, primarily due to an increase in headcount, a $1.1 million increase in stock-based compensation expense, and a $0.1 million increase in external contractor expenses and other personnel costs.

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The following table summarizes our general and administrative expenses for each of the periods presented (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

Increase (Decrease)

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Total general and administrative expenses

General and administrative expenses were $12.1 million for the three months ended June 30, 2025, compared to $5.9 million for the three months ended June 30, 2024.

General and administrative expenses were $13.2 million for the three months ended September 30, 2025, compared to $7.5 million for the three months ended September 30, 2024.

The increase of $5.7 million was primarily attributable to the following:

a $4.9 million increase in personnel costs, including a $3.1 million increase in stock-based compensation expense, and a $1.8 million increase in salary and benefit related expenses, primarily due to an increase in headcount associated with pre-commercialization activities.

a $3.9 million increase in personnel costs, including a $3.3 million increase in stock-based compensation expense, and a $0.7 million increase in salary and benefit related expenses, primarily due to an increase in headcount associated with pre-commercialization activities partially offset by a $0.1 million decrease in contractor-related expenses.

a $1.1 million increase in professional fees, including legal, audit and tax expenses, primarily attributable to operating as a public company;

a $0.7 million increase in facilities and other expenses, primarily attributable to facility, insurance and other variable costs related to operating as a public company.

Acquired In-Process Research and Development

Acquired in-process research and development was $5.0 million for the three months ended September 30, 2025 related to a deposit paid toward the $35.0 million upfront payment for the exclusive rights to develop and manufacture product candidates under the License Agreement with InnoCare.

Total Other Income (Expense), Net

Total other income (expense), net was $3.0 million for the three months ended June 30, 2025, and was primarily due to an increase in interest income and an increase in average balance of investments.

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

Total other income (expense), net was $1.1 million for the three months ended September 30, 2025, was due to an increase in interest income related to our cash equivalents and investments, partially offset by interest expense related to our royalty obligation.

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

The following table summarizes our results of operations for each of the periods presented (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Increase (Decrease)

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General and administrative

Acquired in-process research and development

Total operating expenses

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Income tax benefit

For the six months ended June 30, 2025, revenue increased $10.0 million, compared to the same period in 2024.

For the nine months ended September 30, 2025, revenue increased $10.0 million, compared to the same period in 2024.

The increase is related to the one-time non-refundable upfront cash payment under the Zai License Agreement that was recognized upon delivery of the license and related technology transfer.

We did not recognize any license and collaboration revenue during the six months ended June 30, 2024.

We did not recognize any license and collaboration revenue during the nine months ended September 30, 2024.

Research and Development Expenses

The following table summarizes our research and development expenses for each of the periods presented (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Increase (Decrease)

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Total research and development expenses

Research and development expenses were $78.0 million for the six months ended June 30, 2025, compared to $56.5 million for the six months ended June 30, 2024.

Research and development expenses were $112.3 million for the nine months ended September 30, 2025, compared to $90.0 million for the nine months ended September 30, 2024.

The increase of $22.4 million was primarily attributable to the following:

● a $18.2 million increase in costs related to the development of obexelimab, our lead product candidate, driven by a $9.2 million increase in manufacturing costs for clinical trial materials and an $8.4 million increase in clinical trial costs;

● a $4.1 million decrease in costs related to our partnered regional programs, including a $2.8 million decrease related to ZB005 and a $1.3 million decrease related ZB001, as a result of transitioning these programs to Tenacia and Zai Lab, respectively;

● a $17.6 million increase in costs related to the development of obexelimab, our lead product candidate, primarily driven by a $11.2 million increase in clinical trial and regulatory costs and a $5.6 million increase in manufacturing costs for clinical trial materials;

● a $6.2 million decrease in costs related to our partnered regional programs, including a $4.6 million decrease related to ZB005 and a $1.6 million decrease related ZB001, as a result of transitioning these programs to Tenacia and Zai, respectively;

● a $11.3 million increase in personnel costs, including a $7.2 million increase in salary and benefit related expenses, primarily due to an increase in headcount, a $3.7 million increase in stock-based compensation expense, and a $0.4 million increase in external contractor expenses and other personnel costs.

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The following table summarizes our general and administrative expenses for each of the periods presented (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Increase (Decrease)

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Total general and administrative expenses

General and administrative expenses were $24.6 million for the six months ended June 30, 2025, compared to $10.8 million for the six months ended June 30, 2024.

General and administrative expenses were $37.7 million for the nine months ended September 30, 2025, compared to $18.3 million for the nine months ended September 30, 2024.

The increase of $19.4 million was primarily attributable to the following:

a $10.4 million increase in personnel costs, including a $6.4 million increase in stock-based compensation expense, a $3.6 million increase in salary and benefit related expense, primarily due to an increase in headcount associated with pre-commercialization activities, a $0.6 million increase in recruiting expense and a $0.2 million decrease in contractor-related expenses;

a $14.3 million increase in personnel costs, primarily including a $9.7 million increase in stock-based compensation expense, a $4.4 million increase in salary and benefit related expense, primarily due to an increase in headcount

associated with pre-commercialization activities, a $0.6 million increase in recruiting expense partially offset by a $0.4 million decrease in contractor-related expenses;

a $2.5 million increase in professional fees, including legal, audit and tax expenses, primarily attributable to operating as a public company;

a $2.6 million increase in facilities and other expenses, primarily attributable to facility, insurance and other variable costs related to operating as a public company.

Acquired In-Process Research and Development

Acquired in-process research and development was $5.0 million for the nine months ended September 30, 2025, related to a deposit paid toward the $35.0 million upfront payment for the exclusive rights to develop and manufacture product candidates under the License Agreement with InnoCare.

Total Other Income (Expense), Net

Total other income (expense), net was $6.5 million for the six months ended June 30, 2025, and was primarily due to an increase in interest income and an increase in average balance of investments.

Total other income (expense), net was $7.6 million for the nine months ended September 30, 2025, was due to an increase in interest income related to our cash equivalents and investments, partially offset by interest expense related to our royalty obligation.

Liquidity and Capital Resources

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We have not yet commercialized any product candidates, and we do not expect to generate revenue from sales of any product candidates or from other sources for several years, if at all.

As of June 30, 2025, we had $274.9 million in cash, cash equivalents, and investments and we had an accumulated deficit of $473.2 million.

Through June 30, 2025, we have funded our operations primarily with gross proceeds of $358.0 million through the sale and issuance of our preferred stock, our convertible notes, as well as $65.0 million through our BMS Agreement, Tenacia Agreement and Zai Agreement, and from the sale of common stock in our IPO for which we received $234.3 million in net proceeds, after deducting underwriting discounts, commissions and other offering expenses.

As of September 30, 2025, we had $301.6 million in cash, cash equivalents, and investments and we had an accumulated deficit of $524.7 million.

Additionally, on October 9, 2025, we closed a PIPE of 6,311,030 shares of common stock for gross proceeds of approximately $120.0 million, before deducting placement fees and other expenses.

Through September 30, 2025, we have funded our operations primarily with gross proceeds of $358.0 million through the sale and issuance of our preferred stock, our convertible notes, as well as $65.0 million through our BMS Agreement, Tenacia Agreement and Zai Agreement, collectively, $75.0 million through our Royalty Purchase Agreement, and from the sale of common stock in our IPO for which we received $234.3 million in net proceeds, after deducting underwriting discounts, commissions and other offering expenses.

Future Funding Requirements:

We believe that our available cash, cash equivalents and investments, as of June 30, 2025, are sufficient to fund our operations and capital expenditure requirements for at least the next 12 months from the filing of this Quarterly Report.

We estimate that our existing cash, cash equivalents and investments will be sufficient to fund our projected operations and capital expenditure requirements into the fourth quarter of 2026.

Our primary uses of capital are, and we expect to continue to be, compensation and related expenses, third-party clinical research and development services, manufacturing costs, legal and other regulatory expenses and general overhead costs.

We expect that our available cash, cash equivalents and investments, as of September 30, 2025, together with the $120.0 million of gross proceeds from the PIPE received in October 2025 ( Note 16, Subsequent Events ), will be sufficient to fund our operating and capital expenditures into the fourth quarter of 2026, however it will not be sufficient to fund our operations and capital expenditure requirements for at least the next 12 months from the filing of this Quarterly Report and accordingly have concluded that there is substantial doubt with respect to our ability to continue as a going concern.

Our financial statements do not include any adjustments or changes in classification of assets or liabilities that may result from our possible inability to continue as a going concern.

However, we expect to finance our operations through private or public equity financing, debt financing or other capital resources.

Our primary uses of capital are, and we expect to continue to be, third-party clinical research and development services, manufacturing costs, compensation and related expenses, legal and other regulatory expenses and general overhead costs.

We have based our estimates on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we currently expect.

Additionally, the process of testing drug candidates in clinical trials is costly, and the timing of progress in these trials is uncertain.

We cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates or whether, or when, we may achieve profitability.

We cannot estimate the actual amounts necessary to successfully complete the development and

commercialization of our product candidates or whether, or when, we may achieve profitability.

Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including:

● the scope, timing, progress results and costs of our ongoing obexelimab clinical studies and other research and development activities associated with the development of our other and future product candidates;

● the scope, timing, progress results and costs of our ongoing clinical studies and other research and development activities associated with the development of our other and future product candidates;

● the costs, timing and outcome of regulatory review of product candidates;

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Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financing and additional funding from licenses, strategic alliances and collaboration arrangements.

Except for any obligations of our collaborators to reimburse us for research and development expenses or make milestone or royalty payments under our agreements with them, we will not have any committed external source of liquidity.

Except for any obligations of our collaborators to reimburse us for research and development expenses or

make milestone or royalty payments under our agreements with them, we will not have any committed external source of liquidity.

We have incurred losses and cumulative negative cash flows from operations since our inception.

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The following table provides information regarding our cash flows for each of the periods presented (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash used in operating activities

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Net Cash Used in Operating Activities

Net cash used in operating activities for the six months ended June 30, 2025 was $78.8 million, and was primarily due to our net loss of $85.8 million and a decrease of $9.2 million in accounts payable and a decrease of $0.8 million decrease in prepaid expenses and other assets, partially offset by $11.4 million of stock-based compensation expense and a $5.1 million increase in accrued expenses.

The net increase in accrued expenses was primarily due to an increase in clinical study expenses, while the decrease in accounts payable and prepaid expenses and other assets was primarily due to the timing of vendor payments.

Net cash used in operating activities for the six months ended June 30, 2024 was $50.1 million, and was primarily due to our net loss of $65.8 million, and a $1.3 million decrease in prepaid expenses and other assets, partially offset by a $2.9 million increase in accounts payable, a $0.5 million increase in other current liabilities, a $10.2 million increase in accrued expenses, a $0.8 million increase in the fair value of our BMS Note liability and $2.5 million of stock-based compensation expense.

The increase in accrued expenses and accounts payable was primarily attributable to an increase in research and development expenses, while the decrease in prepaid expenses and other assets was primarily due to the timing of vendor payments.

Net cash used in operating activities for the nine months ended September 30, 2025 was $119.9 million, and was primarily due to our net loss of $137.3 million and a decrease of $11.2 million in accounts payable and a decrease of $0.8 million in prepaid expenses and other assets, partially offset by $18.8 million of stock-based compensation expense, a $5.0 million increase in accrued expenses, an adjustment to cash used in operations of $5.0 million related to acquired in-process research and development expense for a deposit paid toward the $35.0 million upfront payment under the License Agreement with InnoCare.

The net increase in accrued expenses was primarily due to an increase in clinical study expenses, while the decrease in accounts payable was primarily due to the timing of vendor payments.

Net cash used in operating activities for the nine months ended September 30, 2024 was $81.2 million, and was primarily due to our net loss of $104.4 million, partially offset by $6.3 million increase in accounts payable, a $10.2 million increase in accrued expenses, a $0.5 million increase in prepaid expenses and other assets, a $0.8 million increase in the fair value of our BMS Note liability and $5.3 million of stock-based compensation expense.

The increase in accrued expenses and accounts payable was primarily attributable to an increase in research and development expenses, while the increase in prepaid expenses and other assets was primarily due to the timing of vendor payments.

Net Cash Used in Investing Activities

Net cash used in investing activities for the six months ended June 30, 2025 was $198.6 million and consisted primarily of purchases of investments of $225.7 million, offset by proceeds from sales and maturities of investments of $27.1 million.

Net cash used in investing activities for the six months ended June 30, 2024 was $0.1 million and consisted of purchases of property and equipment.

Net cash used in investing activities for the nine months ended September 30, 2025 was $158.5 million and consisted primarily of purchases of investments of $284.9 million and $5.0 million payment as a deposit toward the $35.0 million

upfront payment under the License Agreement with InnoCare, partially offset by proceeds from sales and maturities of investments of $131.4 million.

Net cash used in investing activities for the nine months ended September 30, 2024 was $26.8 million and consisted of purchases of investments of $26.8 million and purchases of property and equipment of $0.1 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2025 was $1.8 million, resulting from $1.8 million of proceeds received from the exercise of stock options.

Net cash provided by financing activities for the six months ended June 30, 2024 was $177.1 million, resulting from $178.4 million in proceeds received from the issuance and sale of shares of our Series C Preferred Stock, net of issuance costs, and $0.2 million of proceeds received from the exercise of stock options, partially offset by a $1.4 million payment of offering costs.

Net cash provided by financing activities for the nine months ended September 30, 2025 was $74.4 million, resulting from $75.0 million in gross proceeds received in connection with the royalty obligation and $2.5 million of proceeds received from the exercise of stock options, offset by $3.3 million of payments related to deferred offering costs.

Net cash provided by financing activities for the nine months ended September 30, 2024 was $411.1 million, resulting from $178.4 million in net proceeds received from the issuance and sale of shares of our Series C Preferred Stock, net proceeds from our IPO of $234.4 million, and $0.2 million of proceeds received from the exercise of stock options, partially offset by a $1.9 million payment of offering costs.

Material Cash Requirements for Known Contractual and Other Obligations

During the three months ended June 30, 2025, there were no material changes to our contractual obligations and commitments from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Contractual Obligations and Commitments” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

During the three months ended September 30, 2025, except as disclosed at Note 13 – Commitments and Contingencies , there were no material changes to our contractual obligations and commitments from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Contractual Obligations and Commitments” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Critical Accounting Policies and Significant Judgments and Estimates

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We qualify as an “emerging growth company” as defined in the JOBS Act.

As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies, including reduced disclosure about our executive compensation arrangements, exemption from the requirements to hold nonbinding advisory votes on executive compensation and golden parachute payments and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

requirements to hold nonbinding advisory votes on executive compensation and golden parachute payments and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

We may take advantage of these exemptions until December 31, 2029 or such earlier time that we are no longer an emerging growth company.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis