What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-13 compared with 2026-05-13 · 147 added, 74 removed, 337 unchanged (40% of the section changed)

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We leverage our experienced executive management team and our established networks throughout the biopharmaceutical industry to identify, acquire and develop product candidates that we believe can provide superior clinical benefits to patients living with autoimmune diseases.

Our lead I&I product candidate, obexelimab, is a bifunctional monoclonal antibody designed to bind both CD19 and FcγRIIb, which are broadly present across B cell lineage, in order to inhibit the activity of cells that are implicated in many autoimmune diseases without depleting them.

autoimmune diseases without depleting them.

Based on existing clinical data generated to date, we believe that targeting B cell lineage via CD19 and FcγRIIb can inhibit B cells and has been shown to be well-tolerated.

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Obexelimab was well tolerated with a safety profile consistent with that observed in previously completed clinical trials.

Based on these results, we plan to submit the obexelimab Biologics License Application to the FDA for the treatment of IgG4-RD in the second quarter of 2026.

We also intend to submit a Marketing Authorization Application to the European Medicines Agency in the second half of 2026.

Based on these results, we submitted the obexelimab Biologics License Application (“BLA”) to the FDA for the treatment of IgG4-RD in May 2026.

In August, the FDA accepted the Company’s BLA and assigned a Prescription Drug User Fee Act (“PDUFA”) target date of May 27, 2027.

We intend to submit a Marketing Authorization Application to the European Medicines Agency in the second half of 2026.

In August 2026, we announced that bioequivalence was established between obexelimab delivered via prefilled syringe and single-dose prefilled pen.

The single-dose prefilled pen has the potential to offer a more convenient delivery option for patients.

We intend to submit a supplemental application to obexelimab’s IgG4-RD BLA, if approved, and to include the bioequivalence data to a European MAA submission in the second half of 2026.

In April 2026, we completed enrollment in the SunStone trial and expect to report topline results, including biomarker data, in the fourth quarter of 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.

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

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As we continue to evaluate the MoonStone data and consider next steps for clinical development in this indication, we will consider, among other items, the evolving treatment landscape in RMS, including existing therapies, current pivotal trial endpoints and prioritization of capital.

In April 2026, we completed enrollment in the SunStone trial and expect to report topline results, including biomarker data, in the fourth quarter of 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.

In October 2025, we entered into a License Agreement (the “InnoCare License Agreement”) with InnoCare Pharma Inc.

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As partial consideration for the Tenacia Agreement, we received a non-creditable, non-refundable upfront fee of $5.0 million from Tenacia.

In addition, we are eligible to receive up to $86.0 million upon the achievement of certain future regulatory and commercial milestones.

In June 2026, we recorded collaboration and license revenue of $1.0 million upon successful achievement of a development milestone.

In addition, we are eligible to receive up to an additional $85.0 million upon the achievement of certain future regulatory and commercial milestones.

In January 2025, we entered into the Zai License Agreement, with Zai Lab (Hong Kong) Limited (“Zai”), under which we granted to Zai an exclusive sublicense to develop and commercialize ZB001 and related programs in greater China.

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As consideration for the InnoCare License Agreement, we made a non-refundable upfront payment of $35.0 million.

We also issued 5,000,000 shares of common stock to InnoCare in a private placement, and we may be required to issue an additional 2,000,000 shares of common stock in a private placement, upon the occurrence of our initiation of a Phase 3 clinical trial for orelabrutinib in any indication other than PPMS.

We are further obligated to pay future regulatory and commercial milestones of up to $723.0 million related to orelabrutinib and future development, regulatory, and commercial milestones of $656.0 million.

We also issued 5,000,000 shares of common stock to InnoCare in a private placement, and we may be required to issue an additional 2,000,000 shares of common stock in a private placement, upon the achievement of a specified development milestone related to a Phase 3 clinical trial for orelabrutinib in any indication other than PPMS.

In addition, we may be obligated to pay royalties on net sales at rates ranging from high-single digits to high-teens for orelabrutinib, and mid-single digits to mid-teens for the preclinical compounds.

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In October 2025, we closed our private investment in public equity (“PIPE”) of 6,311,030 shares of common stock for net proceeds of approximately $111.8 million, after deducting agent fees and other offering costs.

proceeds of up to $200.0 million, in a series of one or more at-the-market (“ATM”) equity offerings (“2025 ATM Program”).

For the three months ended March 31, 2026, we sold 2,827,723 shares of common stock under the 2025 ATM Program, with proceeds of $71.5 million, net of commissions.

As of March 31, 2026, $96.8 million remained available under the 2025 ATM Program.

Additionally, in October 2025, we entered into a sales agreement with Jefferies LLC (“Jefferies”) under which we may, from time to time, issue and sell shares of our common stock having aggregate sales proceeds of up to $200.0 million, in a series of one or more at-the-market (“ATM”) equity offerings (“2025 ATM Program”).

During the six months ended June 30, 2026, we sold 2,827,723 shares of common stock under the 2025 ATM Program, with proceeds of $71.5 million, net of commissions.

As of June 30, 2026, $96.8 million remained available under the 2025 ATM Program.

Further in March 2026, we entered into the Loan Agreement with the Collateral Agent, BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP, which are funds managed by Pharmakon, providing for up to a $250.0 million term loan facility consisting of several tranches of loans that will become available upon the achievement of certain milestones.

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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 months ended March 31, 2026 and 2025 were $81.0 million and $33.6 million, respectively.

As of March 31, 2026, we had an accumulated deficit of $846.1 million.

Our net losses for the three and six months ended June 30, 2026 were $111.5 million and $192.4 million, respectively, and we recorded net loss of $52.2 million and $85.8 million, for the three and six months ended June 30, 2025.

As of June 30, 2026, we had an accumulated deficit of $957.6 million.

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

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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 March 31, 2026, we had $718.5 million in cash, cash equivalents and investments.

As of June 30, 2026, we had $673.9 million in cash, cash equivalents and investments.

We expect that our existing cash, cash equivalents and investments will be sufficient to fund our capital and operating expenditures for at least twelve months from the date of the issuance of these unaudited condensed consolidated financial statements.

We estimate that our existing cash, cash equivalents and investments will be sufficient to fund our projected operations and capital expenditure requirements into 2029.

Assuming receipt of the potential $75 million milestone payment from Royalty Pharma and combined $75 million from the Term Loans associated with achieving FDA marketing approval of obexelimab for IgG4-RD, the Company expects that its cash, cash equivalents and investments will fund its operating expenses and capital expenditure requirements at least through the second quarter of 2029.

Assuming receipt of the potential $75 million milestone payment from Royalty Pharma combined with the potential $75 million from the senior secured term loan with Pharmakon associated with achieving FDA marketing approval of obexelimab for IgG4-RD, we expect our cash, cash equivalents and investments will fund our operating expenses and capital expenditure requirements at least through the second quarter of 2029.

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

Such economic conditions could increase our operating

costs, including our labor costs and research and development costs.

Such economic conditions could increase our operating costs, including our labor costs and research and development costs.

For example, we import drug products and other components from and into China for use in the manufacturing process and in our clinical studies, and such components and products are subject to tariffs, which we anticipate will result in increased costs.

Our operating and labor costs and research and development costs may also be negatively impacted due to supply chain constraints, global geopolitical tensions, worsening macroeconomic conditions and employee availability and wage increases, which may result in additional stress on our working capital.

Additionally, we are subject to other challenges and risk specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the clinical stage biopharmaceutical industry.

Additionally, we are subject to other challenges and risks specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the clinical stage biopharmaceutical industry.

Components of Our Results of Operations

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The revenue recognized to date pursuant to this arrangement relates to the license of obexelimab and the related technology transfer, which was recognized upon delivery of the license.

This arrangement includes the participation by BMS in certain joint global studies of obexelimab in accordance with the terms of the BMS Agreement, in which BMS will reimburse us for its share of the related study costs.

This arrangement includes the participation by BMS in certain joint global studies of obexelimab in accordance with the terms of the BMS Agreement, in which BMS will reimburse us for its share of the

related study costs.

Such reimbursements will be classified as a reduction to research and development expense in the period such costs are incurred.

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Pursuant to the Tenacia Agreement, we transferred our rights, title, interest, liabilities, duties and obligations under the Option and License Agreements with Dianthus to Tenacia for ZB005.

We will recognize development and regulatory milestones as defined in the Tenacia Agreement when the achievement of the underlying milestone events is deemed probable, which is expected to be upon achievement.

The revenue recognized to date pursuant to this arrangement relates to the novation of the ZB005 license, asset transfer and technology transfer, which was recognized upon delivery of the license, related assets and technology transfer as well as revenue related to a certain development milestone which was recognized upon achievement of such milestone.

We will recognize additional development and regulatory milestones as defined in the Tenacia Agreement when the achievement of the underlying milestone events is deemed probable, which is expected to be upon achievement.

Sales milestones and royalties on future sales will be recognized in the period the related sales occur.

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As partial consideration for the Zai License Agreement, we received an upfront fee of $10.0 million from Zai.

In addition, we are 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.

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

For a more detailed description of these agreements, see Note 7, License and Collaboration Revenue, to our unaudited condensed consolidated financial statements in this Quarterly Report.

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Product candidates in later stages of clinical development will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials and additional manufacturing activities.

There are numerous factors associated with

the successful development and commercialization of any product candidates we may develop, including the safety and efficacy of our product candidates, investment in our clinical programs, manufacturing capability and competition with other products, and future commercial and regulatory factors beyond our control that will impact our clinical development program and plans.

There are numerous factors associated with the successful development and commercialization of any product candidates we may develop, including the safety and efficacy of our product candidates, investment in our clinical programs, manufacturing capability and competition with other products, and future commercial and regulatory factors beyond our control that will impact our clinical development program and plans.

The successful development of our current product candidates, or any product candidates we may develop in the future is highly uncertain.

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We anticipate that our general and administrative expenses will increase in the next few years as we increase our headcount to support our continued research and development activities of our product candidates.

These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, among other expenses.

These increases will likely include

increased costs related to the hiring of additional personnel and fees to outside consultants, among other expenses.

We also anticipate increased expenses associated with being a public company, including costs for accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with the rules and regulations of the SEC, listing standards applicable to companies listed on a national securities exchange, director and officer insurance costs, and investor and public relations costs.

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Certain agreements may require the payment of milestones in shares of our common stock, which if determined not to be a derivative or liability are recognized as acquired IPR&D expense and a component of equity based on the fair value of the shares at execution.

Total Other (Expense) Income, Net

Other (Expense) Income, Net

Other (expense) income, net primarily consists of interest expense related to our royalty obligation, our senior secured term loan and our convertible senior notes, income generated from cash equivalents and investments as well as realized and unrealized gains and losses on foreign currency transactions.

Total Other Income (Expense), Net

Other Income (Expense), Net

Other income (expense), net primarily consists of interest expense related to our royalty obligation, our senior secured term loan and our convertible senior notes, income generated from cash equivalents and investments as well as realized and unrealized gains and losses on foreign currency transactions.

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 March 31, 2026 and 2025

Comparison of the Three Months Ended June 30, 2026 and 2025

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

Three Months Ended March 31,

Three Months Ended June 30,

Increase (Decrease)

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General and administrative

Acquired in-process research and development

Total operating expenses

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Interest expense on senior secured term loan

Interest expense on convertible note

Interest income

Other income (expense), net

Total other income (expense), net

Loss before income taxes

Income tax provision (benefit)

For the three months ended June 30, 2026, we recognized license and collaboration revenue of $1.0 million, related to the achievement of a development milestone under the Tenacia Agreement.

For the three months ended June 30, 2025, we did not recognize any license and collaboration revenue.

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,

Increase (Decrease)

Direct research and development expenses by program:

Orelabrutinib

Other programs (ZB002, ZB004, ZB014, ZB021 & ZB022)

Partnered regional programs (ZB001 & ZB005)

Unallocated research and development expenses:

Personnel related expenses (including stock-based compensation)

Other expenses

Total research and development expenses

Research and development expenses were $62.9 million for the three months ended June 30, 2026, compared to $43.0 million for the three months ended June 30, 2025.

The increase of $19.9 million was primarily attributable to the following:

● $0.5 million decrease in costs related to the development of obexelimab, our lead product candidate, driven by $0.8 million decrease in manufacturing costs for clinical trial materials offset by a $0.3 million increase in clinical trial, development and regulatory costs;

● a $11.2 million increase in costs related to the development of orelabrutinib, driven by clinical trial and regulatory costs;

● a $6.2 million increase in personnel costs, including a $4.3 million increase in salary and benefit related expense, due to an increase in headcount, a $1.7 million increase in stock-based compensation expense, and a $0.2 million increase in external contractor expenses and other personnel costs.

General and Administrative Expenses

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

Three Months Ended June 30,

Increase (Decrease)

Personnel related expenses (including stock-based compensation)

Legal and professional fees

Facilities and other expenses

Total general and administrative expenses

General and administrative expenses were $15.7 million for the three months ended June 30, 2026, compared to $12.1 million for the three months ended June 30, 2025.

The increase of $3.6 million was primarily attributable to the following:

● a $2.3 million increase in personnel costs, including a $1.7 million increase in salary and benefit related expense, primarily due to an increase in headcount to support pre-commercialization efforts, a $0.8 million increase in stock-based compensation expense, offset by a $0.1 million decrease in external contractor expense and other personnel costs, and a $0.1 million decrease in recruiting expense;

● a $2.4 million increase in legal and professional fees, including consulting, pre-commercialization efforts, audit and tax expenses, primarily attributable to company growth and continued operations as a public company.

Acquired In-Process Research and Development Expenses

For the three months ended June 30, 2026, acquired IPR&D expenses were $30.0 million, which included $10.0 million, related to the achievement of a milestone under the Xencor Agreement and related to the completion of the FDA marketing authorization submission for obexelimab and $20.0 million, related to the achievement of a Regulatory Milestone under the InnoCare Agreement.

The Company did not recognize any acquired IPR&D expenses for the three months ended June 30, 2025.

Total Other Income (Expense), Net

For the three months ended June 30, 2026, total other income (expense), net was $3.7 million of expense, compared to $3.0 million of income for the three months ended June 30, 2025.

The change of $6.6 million is primarily related to an

increase in interest expense of $10.3 million related to our royalty obligation, senior secured term loan and convertible senior notes, partially offset by interest income related to higher cash, cash equivalents and investments balances.

Comparison of the Six Months Ended June 30, 2026 and 2025

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

Six Months Ended June 30,

Increase (Decrease)

License and collaboration revenue

Total revenue

Operating expenses:

Research and development

General and administrative

Acquired in-process research and development

Total operating expenses

Loss from operations

Other income (expense), net:

Interest expense on royalty obligation

Interest expense on senior secured term loan

Interest expense on convertible note

Interest income

Other (expense) income, net

Total other (expense) income, net

Total other income (expense), net

Loss before income taxes

Income tax provision

For the three months ended March 31, 2026, we did not recognize any revenue.

For the three months ended March 31, 2025, we recognized revenue of $10.0 million 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.

Income tax provision (benefit)

For the six months ended June 30, 2026, we recognized license and collaboration revenue of $1.0 million, related to the achievement of a development milestone under the Tenacia Agreement.

For the six months ended June 30, 2025, we recognized revenue of $10.0 million 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.

Research and Development Expenses

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

Three Months Ended March 31,

Six Months Ended June 30,

Increase (Decrease)

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Total research and development expenses

Research and development expenses were $60.4 million for the three months ended March 31, 2026, compared to $34.9 million for the three months ended March 31, 2025.

Research and development expenses were $123.4 million for the six months ended June 30, 2026, compared to $78.0 million for the six months ended June 30, 2025.

The increase of $45.4 million was primarily attributable to the following:

● a $8.3 million increase in costs related to the development of obexelimab, our lead product candidate, driven by a $4.4 million increase in manufacturing costs for clinical trial materials and a $3.9 million increase in clinical trial, development and regulatory costs;

● a $7.9 million increase in costs related to the development of obexelimab, our lead product candidate, driven by a $4.2 million increase in clinical trial, development and regulatory costs and a $3.7 million increase in manufacturing costs for clinical trial materials;

● a $21.3 million increase in costs related to the development of orelabrutinib, driven by clinical trial and regulatory 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 March 31,

Six Months Ended June 30,

Increase (Decrease)

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Total general and administrative expenses

General and administrative expenses were $16.9 million for the three months ended March 31, 2026, compared to $12.4 million for the three months ended March 31, 2025.

General and administrative expenses were $32.7 million for the six months ended June 30, 2026, compared to $24.6 million for the six months ended June 30, 2025.

The increase of $8.1 million was primarily attributable to the following:

● a $3.9 million increase in personnel costs, including a $2.3 million increase in stock-based compensation expense, a $1.7 million increase in salary and benefit related expense, primarily due to an increase in headcount to support pre-commercialization efforts, and a $0.2 million increase in external contractor expenses and other personnel

costs, offset by a $0.3 million decrease in recruiting expense;

● a $1.5 million increase in legal and professional fees, including consulting, audit and tax expenses, primarily attributable to company growth and continued operations as a public company.

Total Other (Expense) Income, Net

For the three months ended March 31, 2026, total other (expense) income, net was $3.6 million of expense, compared to $3.6 million of income for the three months ended March 31, 2025.

The change of $7.2 million is primarily related to an increase in interest expense of $6.6 million related to our royalty obligation and senior secured term loan, partially offset by interest income related to higher cash, cash equivalents and investments balances.

● a $6.2 million increase in personnel costs, including a $3.4 million increase in salary and benefit related expense, primarily due to an increase in headcount to support pre-commercialization efforts, a $3.1 million increase in stock-based compensation expense, and a $0.1 million increase in external contractor expenses and other personnel costs, offset by a $0.4 million decrease in recruiting expense;

● a $3.9 million increase in legal and professional fees, including consulting, pre-commercialization efforts, audit and tax expenses, primarily attributable to company growth and continued operations as a public company.

Acquired In-Process Research and Development Expenses

For the six months ended June 30, 2026, acquired IPR&D expenses were $30.0 million, which included $10.0 million, related to the achievement of a milestone under the Xencor Agreement and related to the completion of the FDA marketing authorization submission for obexelimab and $20.0 million, related to the achievement of a Regulatory Milestone under the InnoCare Agreement.

The Company did not recognize any acquired IPR&D expenses for the six months ended June 30, 2025.

Total Other Income (Expense), Net

For the six months ended June 30, 2026, total other income (expense), net was $7.3 million of expense, compared to $6.5 million of income for the six months ended June 30, 2025.

The change of $13.8 million is primarily related to an increase in interest expense of $16.9 million related to our royalty obligation, senior secured term loan and convertible senior notes, partially offset by interest income related to higher cash, cash equivalents and investments balances.

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 until 2027 at the earliest, if at all.

As of March 31, 2026, we had $718.5 million in cash, cash equivalents, and investments and we had an accumulated deficit of $846.1 million.

Through March 31, 2026, we have funded our operations primarily with gross proceeds of $358.0 million through the sale and issuance of preferred stock and convertible notes, net proceeds from the sale of common stock of $234.3 million after deducting underwriting discounts, commissions and other offering costs from our IPO, $111.8 million, after deducting placement fees and other offering costs from our PIPE offering, $100.1 million, after deducting commissions and other offering costs from our 2025 ATM Program, $287.3 million, after deducting commissions and issuance costs from our current convertible notes and equity offering, as well as $65.0 million from our BMS Agreement, Tenacia Agreement and Zai License Agreement, collectively, $71.3 million after deducting issuance cost, from our Royalty Purchase Agreement and $72.0 million from the first tranche under our debt arrangement with Pharmakon after deducting discounts and issuance costs.

As of June 30, 2026, we had $673.9 million in cash, cash equivalents, and investments and we had an accumulated deficit of $957.6 million.

Through June 30, 2026, we have funded our operations primarily with gross proceeds of $358.0 million through the sale and issuance of preferred stock and convertible notes, net proceeds from the sale of common stock of $234.3 million after deducting underwriting discounts, commissions and other offering costs from our IPO, $111.8 million, after deducting placement fees and other offering costs from our PIPE offering, $100.1 million, after deducting commissions and other offering costs from our 2025 ATM Program, $330.4 million, after deducting commissions and issuance costs from our current convertible notes and equity offering inclusive of the underwriters’ exercise of the overallotment option in full, as well as $65.0 million from our BMS Agreement, Tenacia Agreement and Zai License Agreement, collectively, $71.3 million after deducting issuance cost, from our Royalty Purchase Agreement and $72.0 million from the first tranche under our debt arrangement with Pharmakon after deducting discounts and issuance costs.

Future Funding Requirements:

We expect that our available cash, cash equivalents and investments, as of March 31, 2026, will be sufficient to fund our capital and operating expenditures for at least the next twelve months from the date of the issuance of this Quarterly Report on Form 10-Q.

We expect that our available cash, cash equivalents and investments, as of June 30, 2026, will be sufficient to fund our capital and operating expenditures for at least the next twelve months from the date of the issuance of this Quarterly Report on Form 10-Q.

We estimate that our existing cash, cash equivalents and investments will be sufficient to fund our projected operations and capital expenditure requirements into 2029.

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.

Assuming receipt of the potential $75 million milestone payment from Royalty Pharma combined with the potential $75 million from the senior secured term loan with Pharmakon associated with achieving FDA marketing approval of obexelimab for IgG4-RD, we expect that our cash, cash equivalents and investments will fund our operating expenses and capital expenditure requirements at least through the second quarter of 2029.

Our primary uses of capital are, and we expect to continue to be, third-party clinical research and development services, manufacturing costs, pre-commercialization expenses, 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:

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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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As a result, we will need additional capital to fund our operations, which we may raise through a combination of the sale of our equity, debt financings, or other sources, including potential collaborations.

To the extent that we raise capital through the future sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other

preferences that adversely affect the rights of our existing common stockholders.

If we enter into debt financing arrangements, if available, they may involve restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business.

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We received net proceeds of $73.0 million from the draw of the Tranche A Loan after deducting the 2.00% funding fee.

As of March 31, 2026, we are in compliance with all covenants under the Loan Agreement.

As of June 30, 2026, we are in compliance with all covenants under the Loan Agreement.

The Term Loan bears interest at a rate based upon an annual interest rate of 3-month secured overnight financing rate (subject to a 3.25% floor) plus 5.75% payable quarterly in arrears;

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The Loan Agreement contains customary financial covenants, including (i) at all times prior to the satisfaction of the Tranche B/C Approval Condition, a minimum liquidity requirement and (ii) subject to the outstanding aggregate principal amount of Term Loans advanced under the Loan Agreement being equal to or greater than $200.0 million, a minimum trailing twelve months consolidated net revenue covenant.

Additionally, we and our subsidiaries are

bound by certain restrictive covenants setting forth actions that are not permitted to be taken during the term of the Loan Agreement, including, without limitation, (i) selling or disposing of assets, (ii) amending, modifying or waiving our rights under material agreements, (iii) consummating change in control transactions unless all amounts becoming due under the Loan Agreement are paid in full immediately upon (and concurrent with) the consummation of any such change in control transaction, (iv) incurring additional indebtedness, (v) incurring non-permitted liens or encumbrances on our or our subsidiaries’ assets, (vi) paying dividends or making any distribution or payment on or redeeming, retiring or purchasing any equity interests, (vii) making payments on subordinated indebtedness and (viii) making investments other than permitted acquisitions and permitted investments, in each case, subject to specified exceptions including, in the case of restrictions on incurrence of additional indebtedness, the ability to incur certain convertible indebtedness and enter into certain permitted royalty financing agreements.

Additionally, we and our subsidiaries are bound by certain restrictive covenants setting forth actions that are not permitted to be taken during the term of the Loan Agreement, including, without limitation, (i) selling or disposing of assets, (ii) amending, modifying or waiving our rights under material agreements, (iii) consummating change in control transactions unless all amounts becoming due under the Loan Agreement are paid in full immediately upon (and concurrent with) the consummation of any such change in control transaction, (iv) incurring additional indebtedness, (v) incurring non-permitted liens or encumbrances on our or our subsidiaries’ assets, (vi) paying dividends or making any distribution or payment on or redeeming, retiring or purchasing any equity interests, (vii) making payments on subordinated indebtedness and (viii) making investments other than permitted acquisitions and permitted investments, in each case, subject to specified exceptions including, in the case of restrictions on incurrence of additional indebtedness, the ability to incur certain convertible indebtedness and enter into certain permitted royalty financing agreements.

The Loan Agreement also contains certain events of default, including the following:

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and as a result, prices may vary.

For the three months ended March 31, 2026, we sold 2,827,723 shares of common stock under the 2025 ATM Program, with proceeds of $71.5 million, net of commissions.

As of March 31, 2026, $96.8 million remained available under the 2025 ATM Program.

For the three months ended June 30, 2026, we did not sell any shares of common stock under the 2025 ATM Program.

Since June 30, 2026, we have sold an additional 1,818,181 shares of common stock under the 2025 ATM Program, with proceeds of $48.7 million, net of commissions.

As of the issuance date of this Quarterly Report on Form 10-Q, $46.8 million remained available under the 2025 ATM Program.

Royalty Pharma Agreement

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

Three Months Ended March 31,

Six Months Ended June 30,

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash used in investing activities

Net cash provided by financing activities

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Net Cash Used in Operating Activities

Net cash used in operating activities for the three months ended March 31, 2026 was $75.2 million, and was primarily due to our net loss of $81.0 million, which included non-cash charges principally related to stock-based compensation and interest charges on our agreement with Royalty Pharma.

Net cash used in operating activities for the six months ended June 30, 2026 was $132.4 million, and was primarily due to our net loss of $192.4 million, which included non-cash charges principally related to stock-based compensation and interest charges on our agreement with Royalty Pharma.

Net changes in our working capital during the three months resulted in a $2.4 million cash outflow.

Net cash used in operating activities for the three months ended March 31, 2025 was $37.1 million, and was primarily due to our net loss of $33.6 million, which included non-cash charges principally related to stock-based compensation.

Net changes in our working capital during the three months resulted in an $8.9 million cash outflow.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2026 was $31.6 million and consisted primarily of proceeds from sales and maturities of investments of $108.1 million, partially offset by purchases of investments of $76.5 million.

Net cash used in investing activities for the three months ended March 31, 2025 was $86.3 million and consisted primarily of purchases of investments of $99.1 million and proceeds from the sale and maturities of investments of $12.9 million.

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, which included non-cash charges principally related to stock-based compensation.

Net changes in our working capital during the six months resulted in a $3.7 million cash outflow.

Net Cash Used in Investing Activities

Net cash used in investing activities for the six months ended June 30, 2026 was $256.1 million and consisted primarily of purchases of investments of $408.3 million and $30.0 million of milestone payments, which included $10.0 million, related to the achievement of a milestone under the Xencor Agreement and $20.0 million, related to the achievement of a Regulatory Milestone under the InnoCare Agreement, partially offset by proceeds from sales and maturities of investments of $182.2 million.

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 and proceeds from the sale and maturities of investments of $27.1 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2026 was $433.5 million, resulting primarily from $194.0 million in net proceeds received in connection with the convertible note offering, $94.0 million and $71.5 million received from the sale and issuance of common stock under a follow-on equity offering and 2025 ATM Program, net of commissions, respectively, and $73.5 million in net proceeds received in connection with the senior secured term loan, net of discounts, offset by $0.5 million of payments related to deferred offering costs and debt issuance costs.

Net cash provided by financing activities for the three months ended March 31, 2025 was $0.1 million, resulting from $0.1 million in net proceeds received from the exercise of stock options.

Net cash provided by financing activities for the six months ended June 30, 2026 was $475.5 million, resulting primarily from $223.1 million in net proceeds received in connection with the convertible senior notes offering inclusive of the underwriters’ exercise of the overallotment option in full, $108.1 million and $71.5 million received in net proceeds from the sale and issuance of common stock under a follow-on equity offering inclusive of the underwriters’ exercise of the overallotment option in full and 2025 ATM Program, net of commissions, respectively, and $73.5 million in net proceeds received in connection with the senior secured term loan, net of discounts, offset by $2.5 million of payments related to deferred offering costs and debt issuance costs.

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

Material Cash Requirements for Known Contractual and Other Obligations

During the three months ended March 31, 2026, except as disclosed in Note 13 – Commitments and Contingencies , of these unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q, 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, 2025.

During the three months ended June 30, 2026, except as disclosed in Note 13 – Commitments and Contingencies , of these unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q, 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, 2025.

Critical Accounting Policies and Significant Judgments and Estimates

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The effects of material revisions in estimates, if any, will be reflected in the condensed consolidated financial statements prospectively from the date of change in estimates.

During the three months ended March 31, 2026, there were no material changes in our critical accounting policies from those described under our “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Judgments and Estimates” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, except for the following:

During the six months ended June 30, 2026, there were no material changes in our critical accounting policies from those described under our “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical

Accounting Policies and Significant Judgments and Estimates” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, except for the following:

Embedded Derivative Financial Instruments

During the three months ended March 31, 2026, we entered into a senior secured term loan and issued convertible senior notes, see Note 6, Long – Term Obligations , in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

As of March 2026, we entered into a senior secured term loan and issued convertible senior notes, see Note 6, Long – Term Obligations , in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Our evaluation of our debt and equity transactions, consider whether the transaction includes embedded derivatives and whether any embedded derivatives require bifurcation.

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We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates following the IPO is less than $100.0 million during the most recently completed fiscal year.

We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.

We may continue to be a smaller

reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.

If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

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We may continue to be a smaller reporting company until the fiscal year following the determination that we no longer meet the requirements necessary to be considered a smaller reporting company.

However, as of December 31, 2026, we will no longer qualify as an emerging growth company or a “smaller reporting company” as defined under the JOBS Act and Rule 12b-2 of the Exchange Act due to the market value of our common stock held by our non-affiliates as of the last business day of the fiscal quarter ended June 30, 2026, exceeding the applicable threshold for these statuses.

Accordingly, while we remain eligible to take advantage of certain reduced disclosure and reporting requirements applicable to these statuses with this Quarterly Report on Form 10-Q, we will no longer be eligible to rely on the reduced disclosures and reporting requirements in future periods beginning in 2027.

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