Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited financial statements and related notes thereto as of and for the year ended December 31, 2024 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 6, 2025.

This Quarterly Report on Form 10-Q may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking statements, which represent our intent, belief, or current expectations, involve risks and uncertainties. We use words such as "may," "will," "expect," "anticipate," "estimate," "intend," "plan," "predict," "potential," "believe," "should" and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements may include, but are not limited to, statements concerning projections about our accounting and finances, our clinical trial and product development plans and timelines, the indications, anticipated benefits of, and market opportunities for our drug candidates, our operating runway, our business strategies and plans, and other statements regarding future performance. Although we believe the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risk and we can give no assurances that our expectations will prove to be correct. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. As a result of many factors, including without limitation those set forth under "Risk Factors" under Item 1A of Part II below, and elsewhere in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes.

Overview

We are a clinical-stage biopharmaceutical company pioneering differentiated therapies for the treatment of NI&I indications with significant unmet need. We target biological pathways associated with specific clinical impairments that we believe, once modulated, will demonstrably alter the course of disease.

We have focused our efforts on developing selective compounds targeting challenging molecular pathways and have built a portfolio of small molecule drug candidates. We believe our two clinical stage, internally-discovered drug candidates, PIPE-791 and PIPE-307, will have broad applicability across multiple NI&I indications. We are developing PIPE-307 in collaboration with J&J.

Our wholly-owned lead asset, PIPE-791, is a novel, brain penetrant, small molecule inhibitor of the lysophosphatidic acid 1 receptor ("LPA1R") in development for idiopathic pulmonary fibrosis ("IPF") and chronic pain. LPA1R antagonism is a clinically validated mechanism in IPF, and we believe that our preclinical studies and Phase 1 healthy volunteer data support the development of PIPE-791 for IPF and chronic pain. Specifically, based on its high bioavailability, low plasma protein binding, and long receptor occupancy time in our preclinical studies compared to the preclinical data of other LPA1R antagonists, we believe PIPE-791 has the potential to be a differentiated LPA1R therapy. We have completed a Phase 1 clinical trial of PIPE-791 in healthy volunteers in support of clinical development in IPF and chronic pain as well as a Phase 1b open-label trial to measure the relationship of pharmacokinetics ("PK") to lung and brain receptor occupancy by positron emission tomography ("PET") imaging to inform dose selection in our future Phase 2 trials of PIPE-791. We plan to initiate a global Phase 2 clinical trial in IPF in the fourth quarter of 2025. In March 2025, we announced the initiation of patient dosing in an exploratory PIPE-791 Phase 1b, randomized, double-blind, placebo-controlled, crossover, chronic pain trial for the treatment of chronic pain associated with two separate indications, chronic osteoarthritis and chronic low back pain. We expect to enroll approximately 40 patients at up to five sites in the U.S., and a treatment duration of 28 days. We anticipate topline data from this trial in the first half of 2026.

Our second drug candidate, PIPE-307, is a novel, small molecule selective inhibitor of the muscarinic type 1 receptor ("M1R"), in development for depression and relapse-remitting multiple sclerosis ("RRMS"). We have completed two Phase 1 trials of PIPE-307 in healthy volunteers. In 2023, we initiated a Phase 2 VISTA trial of PIPE-307 for the potential treatment of RRMS. In January 2025, we announced that we have fully enrolled our Phase 2 VISTA trial. We expect the topline data from this trial will be available in the fourth quarter of 2025. In December 2024, J&J began recruiting an estimated 124 adult participants for a Phase 2 trial of PIPE-307/JNJ-89495120 for the potential treatment of major depressive disorder ("MDD"). This trial is a randomized, double-blind, multi-center, placebo-controlled, proof-of-concept study to evaluate the efficacy, safety and tolerability of PIPE-307/JNJ-89495120 as monotherapy in adult participants with MDD. We believe PIPE-307 is the most advanced selective M1R antagonist in clinical development.

In addition, we are leveraging our drug discovery capabilities to expand our clinical portfolio. We are actively conducting preclinical and discovery-phase experiments targeting other NI&I indications where our internally-discovered molecules may have therapeutic potential.

We have a portfolio of novel and proprietary small molecule programs that we believe can modulate innate pathways to restore function in NI&I indications. We retain worldwide rights to our LPA1R programs and discovery portfolio, and we have partnered with J&J for the development and potential commercialization efforts of PIPE-307.

We expect our operating expenses to significantly increase as we continue to develop, conduct clinical trials, and seek regulatory approvals for our drug candidates, engage in other research and development activities to expand the indications for our existing drug candidates and develop a pipeline of additional drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio, and, if we obtain approval for one or more of our drug candidates, launch commercial activities. We also expect to incur additional operating expenses as we continue operating as a public company. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing and scope of our clinical trials and our expenditures on other research and development activities.

As we continue to pursue our business plan, we expect to finance our operations through both public and private sales of equity, debt financings or other commercial arrangements, which could include income from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. However, there can be no assurance that any additional financing or strategic transactions will be available to us on acceptable terms, if at all. If events or circumstances occur such that we do not obtain additional funding, we may need to delay, reduce or eliminate our product development or future commercialization efforts, which could have a material adverse effect on our business, results of operations or financial condition. Further, if we raise funds through licensing or other commercial arrangements with third parties, we may be required to relinquish valuable rights to our technology, future revenue streams, research programs or drug candidates or may be required to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.

Collaboration

In February 2023, we entered into a license agreement with J&J (the "J&J License Agreement"), pursuant to which we granted J&J an exclusive, worldwide license to develop, manufacture and commercialize PIPE-307 in all indications.

J&J is generally responsible for all development, manufacturing and commercialization activities for PIPE-307. Upon J&J conducting a first Phase 3 clinical trial for a product using PIPE-307, we have an opt-in right to fund a portion of all Phase 3 and subsequent development costs for PIPE-307. If we opt to fund such development costs, then the royalties we are eligible to receive will increase by one to two percentage points.

We are conducting, at our own expense, a Phase 2 clinical trial of PIPE-307 in patients with RRMS. We completed enrollment of our Phase 2 clinical trial in December 2024, and expect the topline data from this trial will be available in the fourth quarter of 2025. J&J has the right, in its sole discretion, to further develop or to elect not to develop PIPE-307 for this indication. In December 2024, J&J began recruiting an estimated 124 adult participants for a Phase 2 trial of PIPE-307/JNJ-89495120 for the potential treatment of MDD. This trial is a randomized, double-blind, multi-center, placebo-controlled, proof-of-concept study to evaluate the efficacy, safety and tolerability of PIPE-307/JNJ-89495120 as monotherapy in adult participants with MDD.

The J&J License Agreement expires on a licensed product-by-product and country-by-country basis upon the last to occur of: (i) the expiration of the last-to-expire licensed patent claim covering the composition of matter of the licensed compound in such licensed product in such country; (ii) the expiration of exclusive marketing rights conferred by a regulatory authority or applicable law (other than patent exclusivity) for such licensed product in such country; or (iii) ten years after the first commercial sale of such licensed product in such country. Either party may terminate the J&J License Agreement in the event of an uncured material breach by the other party or a bankruptcy or insolvency of the other party. J&J may terminate the J&J License Agreement without cause upon prior written notice to us. Upon any termination, all license rights granted to J&J terminate.

Financial Operations Overview

Revenue

We recognize license revenues as identified performance obligations are satisfied or other events occur, specifically related to our J&J License Agreement. Pursuant to the terms of the J&J License Agreement, we received an upfront payment of $50.0 million in May 2023. We are also eligible to receive approximately $1.0 billion in non-refundable, non-creditable milestone payments, pursuant to the terms of the J&J License Agreement. Additionally, we are eligible to receive tiered royalties in the low-double digit to high-teen percent range on net sales of products containing PIPE-307. We do not have any products approved for sale and we have not yet generated any revenue from product sales. We did not recognize any revenue for the three and nine months ended September 30, 2025 or 2024.

Operating Expenses

Research and Development

Research and development expenses consist primarily of costs incurred for our internal research and development activities.

Direct costs include:

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employee-related expenses, including salaries, related benefits, and travel that can be directly attributable to each research project;

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expenses incurred in connection with research, laboratory consumables and preclinical studies;

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expenses incurred in connection with conducting clinical trials, including investigator grants and site payments for time and pass-through expenses and expenses incurred under agreements with contract research organizations ("CROs"), other vendors or central laboratories and service providers engaged to conduct our trials;

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the cost of consultants engaged in research and development related services;

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the cost to manufacture drug products for use in our preclinical studies and clinical trials; and

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costs related to regulatory compliance.

Unallocated internal research and development costs include:

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employee-related expenses, including salaries, related benefits, and travel that cannot be directly attributable to a specific research project;

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stock-based compensation for employees engaged in research and development functions; and

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facilities, depreciation and other related expenses.

We expense our research and development costs as they are incurred. We record advance payments for goods or services to be received in the future for use in research and development as prepaid expenses. We then expense the prepaid amounts as the related goods are delivered or the services are performed.

We track outsourced development costs, consultant costs and other external research and development costs such as third-party contract costs relating to manufacturing, clinical trial activities, translational medicine and toxicology activities to specific programs. We allocate employee related costs including salaries and related benefits based upon the level of effort for each specific project.

Certain employee activities that cannot be allocated to any one specific project or management related activities are considered indirect costs. The following tables summarize our research and development expenses for the three and nine months ended September 30, 2025 and 2024. The direct external development program expenses reflect external costs attributable to our clinical development and preclinical programs and personnel costs that can be directly attributed to a development program. The unallocated internal research and development costs include unallocated personnel costs, facility costs, stock-based compensation, laboratory consumables and discovery and research related activities.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2025				2024				2025				2024
		(in thousands)								(in thousands)
Direct external development program expense
PIPE-791		$	4,465			$	2,707			$	16,197			$	7,596
PIPE-307			1,526				3,214				6,301				7,547
CTX-343			512				567				2,949				1,453
Discovery programs			1,263				1,109				3,973				3,456
Unallocated internal research and development costs
Personnel related			831				671				2,666				1,524
Stock-based compensation			1,176				922				3,353				1,930
Facilities costs			490				220				1,476				675
Others			729				318				1,852				1,226
Total research and development costs		$	10,992			$	9,728			$	38,767			$	25,407

Research and development activities are central to our business model. There are numerous factors associated with the successful commercialization of any of our drug candidates, including future clinical trial design and various regulatory requirements, many of which we cannot determine with accuracy at this time based on our stage of development. In addition, future regulatory factors beyond our control may impact our clinical development programs. Drug candidates in later stages of clinical development 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. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our drug candidates and our costs may increase if we exercise our opt-in right to fund a portion of all Phase 3 and subsequent development costs for PIPE-307 pursuant to the J&J License Agreement. However, we expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities in the near term and for the foreseeable future.

The successful development of our drug candidates is highly uncertain. This is due to numerous risks and uncertainties, including the following:

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successful completion of preclinical studies and clinical trials;

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delays in regulators or institutional review boards authorizing us or our investigators to commence or continue our clinical trials;

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our ability to negotiate agreements with clinical trial sites or CROs;

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the number of clinical sites included in our clinical trials;

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raising additional funds necessary to complete clinical development of our drug candidates;

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obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our drug candidates;

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establishing and qualifying manufacturing capabilities for clinical supplies of our drug candidates, whether directly or through qualified third party manufacturers;

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our ability to receive necessary regulatory approvals from the U.S. Food and Drug Administration and comparable governmental bodies outside the United States;

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our decision to elect to fund a portion of Phase 3 and subsequent development costs for PIPE-307;

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coverage for our products by governmental and third party payors;

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protecting and enforcing our rights in our intellectual property portfolio;

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our ability to successfully compete with our competitors and their product offerings; and

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maintaining a continued acceptable safety profile of the products following approval.

A change in the outcome of any of these variables with respect to the development of our drug candidates may significantly impact the costs and timing associated with the development of our drug candidates. We may never succeed in obtaining regulatory approval for any of our drug candidates or successfully commercialize our products, even if approved.

General and Administrative

General and administrative expenses consist primarily of salaries and employee-related costs, including stock-based compensation, for personnel in executive, finance and other administrative functions. Other significant costs include legal fees relating to intellectual property, patent applications, and corporate matters, professional fees for accounting and consulting services and facility-related costs.

We expect our general and administrative expenses will increase for the foreseeable future to support our increased research and development activities, the growth of our business operations and headcount and to reflect increased operating expenses as we continue operating as a public company. These increased costs will likely include increased expenses related to audit, legal, regulatory services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs.

Other Income (Expense)

Interest Income

Interest income consists of interest earned on our cash, cash equivalents and marketable securities.

Results of Operations

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

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

		Three Months Ended
		September 30,
		2025				2024				Change
Operating expenses:
Research and development		$	10,992			$	9,728			$	1,264
General and administrative			3,940				3,246				694
Total operating expenses			14,932				12,974				1,958
Loss from operations			(14,932	)			(12,974	)			(1,958	)
Other income (expense):
Interest income			1,957				2,741				(784	)
Change in fair value of warrant liability			-				-				-
Other income (expense), net			183				(34	)			217
Total other income, net			2,140				2,707				(567	)
Net loss		$	(12,792	)		$	(10,267	)		$	(2,525	)

Research and development expenses. Research and development expenses were $11.0 million and $9.7 million for the three months ended September 30, 2025 and 2024, respectively. The increase of $1.3 million from period to period was due to the following:

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$1.1 million increase in personnel-related expense related to an overall increase in personnel from period to period;

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$1.1 million increase in contract research organization costs due to a $1.3 million increase in startup costs related to the Phase 2 trial for PIPE-791 for the treatment of IPF, a $1.0 million increase in costs related to the Phase 1b trial for PIPE-791 for the treatment of chronic pain, and a $0.4 million increase in costs related to the Phase 1b PET trial for PIPE-791, partially offset by a $1.6 million decrease in costs related to the VISTA Phase 2 clinical trial for PIPE-307 for the treatment of RRMS;

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$0.3 million increase in facilities costs;

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$0.3 million increase in non-cash stock-based compensation; and

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$0.1 million increase in biology and chemistry supplies.

Partially offsetting these increases was a $1.3 million decrease in expenses for toxicology studies primarily for PIPE-791 and a $0.3 million decrease in manufacturing expenses for PIPE-791 and CTX-343.

General and administrative expenses. General and administrative expenses were $3.9 million and $3.2 million for the three months ended September 30, 2025 and 2024, respectively. The increase of $0.7 million was due to a $0.5 million increase in personnel-related expenses related to an overall increase in personnel from period to period, a $0.1 million increase in facilities costs, and a $0.1 million increase in other administrative costs.

Interest income. Interest income was $2.0 million and $2.7 million for the three months ended September 30, 2025 and 2024, respectively. The decrease of $0.7 million was due to a decrease in funds invested in marketable securities and a decrease in the yields earned on our marketable securities during the three months ended September 30, 2024 compared to the three months ended September 30, 2025.

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

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

		Nine Months Ended
		September 30,
		2025				2024				Change
Operating expenses:
Research and development		$	38,767			$	25,407			$	13,360
General and administrative			12,177				8,440				3,737
Total operating expenses			50,944				33,847				17,097
Loss from operations			(50,944	)			(33,847	)			(17,097	)
Other income (expense):
Interest income			6,236				6,377				(141	)
Change in fair value of warrant liability			-				(107	)			107
Other expense, net			(114	)			(116	)			2
Total other income, net			6,122				6,154				(32	)
Net loss		$	(44,822	)		$	(27,693	)		$	(17,129	)

Research and development expenses. Research and development expenses were $38.8 million and $25.4 million for the nine months ended September 30, 2025 and 2024, respectively. The increase of $13.4 million from period to period was due to the following:

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$9.1 million increase in contract research organization costs due to a $4.9 million increase in startup costs related to the Phase 2 trial for PIPE-791 for the treatment of IPF, a $3.1 million increase in costs related to the Phase 1b trial for PIPE-791 for the treatment of chronic pain, and a $1.9 million increase in costs related to the Phase 1b PET trial for PIPE-791, partially offset by a $0.8 million decrease in costs related to the VISTA Phase 2 clinical trial for PIPE-307 for the treatment of RRMS;

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$3.6 million increase in personnel-related expense related to an overall increase in personnel from period to period;

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$1.4 million increase in non-cash stock-based compensation;

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$0.8 million increase in facilities costs; and

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$0.6 million increase in consulting expenses.

Partially offsetting these increases was a $1.5 million decrease in expenses for toxicology studies primarily for PIPE-791 and a $0.6 million decrease in manufacturing expenses for PIPE-791 and CTX-343.

General and administrative expenses. General and administrative expenses were $12.1 million and $8.4 million for the nine months ended September 30, 2025 and 2024, respectively. The increase of $3.7 million was primarily due to a $1.7 million increase in personnel-related expenses related to an overall increase in personnel from period to period, a $1.6 million increase in non-cash stock-based compensation, a $0.3 million increase in facilities costs and a $0.1 million increase in director and officer insurance.

Liquidity and Capital Resources

Sources of Liquidity

We have incurred net losses and negative cash flows from operations in nearly every reporting period since our inception and anticipate that we will continue to incur net losses for the foreseeable future. We expect to incur substantial expenditures as we advance our drug candidates through clinical development, undergo the regulatory approval process, engage in other research and development activities to expand our pipeline of drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio and, if we obtain approval for one or more of our drug candidates, launch commercial activities.

Through September 30, 2025, we have funded our operations primarily from the sale of equity securities and convertible equity securities, borrowings under credit facilities, the J&J License Agreement, and net proceeds from the IPO and ATM Program. Through September 30, 2025, we have raised gross proceeds of approximately $332.4 million through equity issuances and an upfront payment from the J&J License Agreement of $50.0 million. In addition, we borrowed $5.0 million at the inception of the loan and security agreement with First Citizens Bank. Upon the closing of the IPO, our outstanding convertible preferred stock automatically converted into Class A common stock or Class B common stock, as applicable. In April 2024, we raised approximately $107.9 million in net proceeds from the IPO. As of September 30, 2025, we had an accumulated deficit of $162.2 million.

As of September 30, 2025, we had cash, cash equivalents and marketable securities of $182.4 million. Based on our current operating plan, we believe that our existing cash and cash equivalents and short-term investments, will be sufficient to meet our anticipated operating expenses and capital expenditure requirements through at least the next 12 months, following the date of this Quarterly Report on Form 10-Q.

In May 2025, the Company entered into the Sales Agreement. During the three months ended September 30, 2025, the Company sold 3,241,110 shares of its Class A common stock pursuant to the Sales Agreement. The shares of Class A common stock were sold at a weighted average price of $6.04 per share, resulting in gross proceeds of $19.6 million. The Company raised $19.0 million in net proceeds after deducting sales agent commissions and offering costs of $0.6 million.

As we continue to pursue our business plan, we expect to finance our operations through both public and private sales of equity, debt financings or other commercial arrangements, which could include milestone payments from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. However, there can be no assurance that any additional financing or strategic transactions will be available to us on acceptable terms, if at all. If events or circumstances occur such that we do not obtain additional funding, we may need to delay, reduce or eliminate our product development or future commercialization efforts, which could have a material adverse effect on our business, results of operations or financial condition. Further, if we raise funds through licensing or other commercial arrangements with third parties, we may be required to relinquish valuable rights to our technology, future revenue streams, research programs or drug candidates or may be required to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.

Cash Flows

The following table sets forth a summary of our cash flows for the periods indicated (in thousands):

		Nine Months Ended
		September 30,
		2025				2024
Net cash used in operating activities		$	(42,270	)		$	(22,643	)
Net cash provided by (used in) investing activities			43,740				(60,351	)
Net cash provided by financing activities			19,220				108,359
Net increase (decrease) in cash and cash equivalents		$	20,690			$	25,365

Operating Activities

Net cash used in operating activities was $42.3 million for the nine months ended September 30, 2025, which related to our net loss of $44.8 million and a $5.3 million change in operating assets and liabilities, partially offset by $7.8 million of non-cash charges for stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and non-cash operating lease expense. Net cash used in operating activities was $22.6 million for the nine months ended September 30, 2024, which primarily related to our net loss of $27.7 million, partially offset by $2.6 million of non-cash charges for stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and non-cash operating lease expense, and $2.4 million change in operating assets and liabilities.

Investing Activities

Net cash provided by investing activities was $43.7 million for the nine months ended September 30, 2025, which related to $121.7 million of sales and maturities of marketable securities, partially offset by $77.8 million of purchases of marketable securities and $0.2 million for purchases of property and equipment. Net cash used in investing activities was $60.4 million for the nine months ended September 30, 2024, which primarily related to $172.1 million of purchases of marketable securities and $0.3 million of purchases of property and equipment, partially offset by $112.0 million of sales and maturities of marketable securities.

Financing Activities

Net cash provided by financing activities was approximately $19.2 million for the nine months ended September 30, 2025, which was primarily related to $19.0 million of proceeds from the issuance of common stock in the ATM Program, $0.3 million of proceeds from employee stock purchase plan, and $0.2 million of proceeds from the exercise of stock options, partially offset by $0.3 million in payments of deferred offering costs. Net cash provided by financing activities was $108.4 million for the nine months ended September 30, 2024, which primarily related to $107.9 million of net proceeds from the issuance of common stock in the Company's IPO and $0.1 million of proceeds from the exercise of stock options.

Funding Requirements

We expect our operating expenses to significantly increase as we continue to develop and seek regulatory approvals for our drug candidates, engage in other research and development activities to expand our pipeline of drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio, and, if we obtain approval for one or more of our drug candidates, launch commercial activities. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and our actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing our drug candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.

Our future capital requirements will depend on many factors, including:

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the type, number, scope, progress, expansions, results, costs and timing of, our clinical trials and preclinical studies for our drug candidates or other potential drug candidates or indications which we are pursuing or may choose to pursue in the future;

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the outcome, timing and costs of regulatory review of our drug candidates;

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the costs and timing of manufacturing for our drug candidates;

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our efforts to enhance our operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting;

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the costs associated with hiring additional personnel and consultants as our preclinical and clinical activities expand;

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the costs and timing of establishing or securing manufacturing facilities for our drug candidates;

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the costs and timing of establishing sales and marketing capabilities if any of our drug candidates are approved;

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our ability to establish and maintain strategic collaborations, licensing or other arrangements;

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the financial terms of any such agreements that we may enter into;

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our decision to elect to fund a portion of Phase 3 and subsequent development costs for PIPE-307;

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the costs of obtaining, maintaining and enforcing our patent and other intellectual property rights; and

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costs associated with any drug candidates, products or technologies that we may in-license or acquire.

Until such time as we can generate significant revenue from sales of our drug candidates, if ever, we expect to finance our cash needs through public or private equity or debt financings or other commercial arrangements, including collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. We may be unable to raise additional funds or enter into such commercial arrangements when needed, on favorable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may be required to relinquish valuable rights to our drug candidates, future revenue streams or research programs or may be required to grant licenses on terms that may not be favorable to us and may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings or through commercial arrangements when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our drug candidates even if we would otherwise prefer to develop and market such drug candidates ourselves.

Contractual Obligations and Commitments

Our contractual obligations and commitments relate to our operating leases that relate primarily to our leases of office and laboratory space in San Diego, California. Our total contractual commitments for our lease agreements amount to approximately $7.3 million as of September 30, 2025.

We enter into contracts in the normal course of business for contract research services, contract manufacturing services, professional services and other services and products for operating purposes. These contracts generally provide for termination after a notice period, and, therefore, are cancelable contracts and not included in the table above.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules and regulations of the SEC.

Critical Accounting Policies and Significant Judgments and Estimates

Management's discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenue, and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates and judgments, including those related to the accrual of research and development expenses; the incremental borrowing rate used to recognize the right-of-use assets and lease liabilities, the fair value of common stock and convertible preferred stock; and stock-based compensation We base our estimates and assumptions on historical experience, known trends and events, and various other factors that we believe are reasonable and appropriate under the circumstances, the results of which form the basis for making judgments about the carrying values of our assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting estimates from those described under our "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Significant Judgements and Estimates" included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Emerging growth company and smaller reporting company status

We are an "emerging growth company," as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. We will remain an emerging growth company until the earlier of (i) December 31, 2029, the last day of the fiscal year following the fifth anniversary of the completion of the IPO, (ii) the last day of the fiscal year (a) in which we have total annual gross revenue of at least $1.235 billion or (b) in which we are deemed to be a large accelerated filer, which means the market value of our voting and non-voting common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, or (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We are also a "smaller reporting company" as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter.