Quarterly Report for Quarter Ending June 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 and the unaudited interim condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q should be read in conjunction with the 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 contained in the Annual Report on Form 10-K filed with the SEC on March 19, 2025. This discussion and analysis and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives and expectations for our business. Our actual results and the timing of selected events could differ materially from those described in or implied by these forward-looking statements as a result of several factors, including those set forth under "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q. See also the section titled "Special Note Regarding Forward-Looking Statements."

Overview

Our mission is to significantly improve the lives of patients by replacing broad immunosuppression with targeted therapies. Our name, Alumis, captures our mission to enlighten immunology, and is inspired by the words "allumer"-French for illuminate-and "immunis"-Latin for the immune system.

We are a clinical stage biopharmaceutical company with an initial focus on developing our two Tyrosine Kinase 2 ("TYK2") inhibitors: envudeucitinib (or "envu"), formerly known as ESK-001, a second-generation inhibitor that we are developing to maximize target inhibition and optimize tolerability, and A-005, a central nervous system ("CNS") penetrant molecule. Envu has demonstrated significant therapeutic effect in our Phase 2 program in patients with moderate-to-severe plaque psoriasis ("PsO"), and is currently being evaluated in an additional Phase 2 clinical trial in patients with systemic lupus erythematosus ("SLE"), for which we expect to report topline results in the third quarter of 2026. With the favorable results in our Phase 2 clinical trial in PsO, we have initiated our Phase 3 ONWARD clinical program, which consists of two parallel Phase 3 clinical trials of envu in this indication and for which we expect to report topline results early in the first quarter of 2026. These parallel Phase 3 clinical trials also include one long-term extension ("LTE") study, ONWARD3. In addition, the open-label extension ("OLE") of our Phase 2 clinical trial in PsO remains ongoing. TYK2 genetic mutations are associated with a strong protective effect in multiple sclerosis, motivating us to develop our second product candidate, A-005, as a CNS-penetrant, allosteric TYK2 inhibitor for neuroinflammatory and neurodegenerative diseases. In April 2024, we initiated our Phase 1 program of A-005 in healthy volunteers and reported initial results in December 2024. In addition, in connection with the ACELYRIN Merger, we acquired lonigutamab, a subcutaneously delivered, monoclonal antibody targeting IGF-1R for the potential treatment of TED. We are continuing to evaluate the development program for lonigutamab and its potential differentiation in a capital efficient manner.

Since our inception, we have devoted substantially all of our efforts to organizing our company, hiring personnel, business planning, acquiring and developing our product candidates, performing research and development, conducting preclinical studies and clinical trials, establishing and protecting our intellectual property portfolio, raising capital and providing general and administrative support for these activities. We do not have any products approved for sale and have not generated any revenue from product sales. We expect to continue to incur significant and increasing expenses and increasing substantial losses for the foreseeable future as we continue our development of and seek regulatory approvals for our product candidates and commercialize any approved products, seek to expand our product pipeline and invest in our expanded organization following the ACELYRIN Merger. Our ability to achieve and sustain profitability will depend on our ability to successfully develop, obtain regulatory approval for and commercialize our product candidates. There can be no assurance that we will ever achieve profitability, or if achieved, that the revenue or profitability will be sustained on a continuing basis.

To date, we have primarily funded our operations primarily through issuance of common stock, including in our IPO and Concurrent Private Placement, the issuance of redeemable convertible preferred stock and convertible promissory notes in private placements and, most recently, the acquisition of cash, cash equivalents and marketable securities in connection with the ACELYRIN Merger and payments received under our Collaboration Agreement with Kaken.

We have incurred significant operating losses and negative cash flows since our inception. Our net income (loss) for the three and six months ended June 30, 2025 and 2024 was $59.3 million, $(56.5) million, $(39.6) million and $(106.4) million, respectively. As of June 30, 2025, we had an accumulated deficit of $698.2 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development efforts, including acquisitions of in-process research and development assets, and, to a lesser extent, from general and administrative costs associated with our operations. Our net losses and operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of acquisition of any new product candidates, the timing of our preclinical studies and clinical trials, our other research and development expenses, and the timing and amount of any milestone or royalty payments due under our existing or future license agreements. In addition, we have incurred and will continue to incur substantial expenses associated with the ACELYRIN Merger and the integration and development activities related to the acquired ACELYRIN business. We have incurred and will continue to incur additional costs associated with operating as a public company, including significant legal, audit, accounting, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer liability insurance costs, investor and public relations costs, and other expenses that we did not incur as a private company.

We anticipate that our expenses will increase significantly in connection with our ongoing activities, particularly if and as we:

We do not have any products approved for sale and have not generated any revenue from product sales since our inception. We do not expect to generate revenue from any product candidates that we develop until we obtain regulatory approval for one or more of such product candidates and commercialize our products or enter into collaboration agreements with third parties. Because of the numerous risks and uncertainties associated with biopharmaceutical product development, we may never achieve or sustain profitability and, unless and until we are able to develop and commercialize our product candidates, we will need to continue to raise additional capital. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through public or private equity or debt financings, or potentially other capital sources, such as collaboration or licensing arrangements with third parties or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing to support our business plans when needed on acceptable 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 additional funds through collaboration or licensing arrangements with third parties or other strategic transactions, we may have to relinquish rights to our intellectual property, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise capital as and when needed, or on attractive terms, we may have to significantly delay, reduce, or discontinue the development and commercialization of our product candidates or scale back or terminate our pursuit of new in-licenses and acquisitions.

We do not currently own or operate any manufacturing facility. We rely on CMOs to produce our product candidates in accordance with the U.S. Food and Drug Administration's (the "FDA") current Good Manufacturing Practices ("cGMP") regulations for use in our clinical studies. We have entered into development and manufacturing agreements with various CMOs relating to process development, manufacturing of drug substance and drug product, and quality testing of our product candidates. We expect to rely on our CMOs in the future for the manufacturing of our product candidates in order to expedite readiness for future clinical trials. Most of these CMOs have demonstrated capability in preparation of materials for commercialization. Additionally, we may decide to build our own manufacturing facility in the future to provide us greater flexibility and control over our clinical or commercial manufacturing needs.

Given our stage of development, we do not yet have a marketing or sales organization or commercial infrastructure; however, we intend to build the necessary sales, marketing and commercialization capabilities and infrastructure over time as our product candidates advance through clinical development. We expect to spend a significant amount in commercial development and marketing costs prior to obtaining regulatory and marketing approval of one or more of our product candidates.

IPO and Concurrent Private Placement

On July 1, 2024, we completed our IPO, pursuant to which we issued and sold 13,125,000 shares of our common stock at $16.00 price per share to the public. Net proceeds from the IPO were $193.3 million, after deducting underwriting discounts and commissions and other offering costs totaling $16.7 million. In connection with the IPO, an existing investor and a holder of more than 5% of our capital stock, purchased an additional 2,500,000 shares of our common stock at the IPO price per share for total gross and net proceeds of $40.0 million in a private placement transaction. The closing of the Concurrent Private Placement was contingent on the closing of the IPO. The sale of such shares is not registered under the Securities Act, and as such, the shares may not be offered or sold absent registration or an applicable exemption from registration. The shares sold in connection with the Concurrent Private Placement are subject to existing resale registration rights. The Concurrent Private Placement closed on July 17, 2024.

Immediately prior to the closing of the IPO on July 1, 2024, all of the shares of our redeemable convertible preferred stock then outstanding converted into 28,855,656 shares of Class A common stock and 7,184,908 shares of Class B common stock at a 1-for-4.675 conversion ratio. All outstanding Class A common stock shares and all outstanding Class B common stock shares were redesignated immediately thereafter into the same number of shares of common stock and non-voting common stock, respectively.

ACELYRIN Merger

On February 6, 2025, we entered into a Merger Agreement with ACELYRIN and Merger Sub, a Delaware corporation and a direct wholly owned subsidiary. The Merger Agreement was approved by the disinterested directors on our board of directors and the board of directors of ACELYRIN and was approved by the stockholders of each company on May 13, 2025. On May 21, 2025, we completed the ACELYRIN Merger in a common stock transaction valued at approximately $238.1 million settled through the issuance of 48,653,549 shares of our common stock to acquire net assets with a fair value of $426.0 million. See Note 3 to our unaudited condensed consolidated financial statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q for additional information.

Our results of operations include the accounts of ACELYRIN and its wholly owned subsidiary WH2, LLC after the closing of the Merger, and the accounts of Merger Sub from its incorporation in January 2025 until the ACELYRIN Merger. Accordingly, the results discussed below were impacted by the timing of the ACELYRIN Merger. WH2, LLC has not had any operations or any balances from its inception. See Note 2 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Macroeconomic Trends

Our business and results of operations may be affected by worldwide economic conditions, which may continue to be impacted by global macroeconomic challenges and uncertainty in the markets, including severely diminished liquidity and credit availability, rising inflation and monetary supply shifts, rising interest rates, labor shortages, declines in consumer confidence, declines in economic growth, increases in unemployment rates, recession risks and uncertainty about economic and geopolitical stability (for example, related to the ongoing conflicts in Ukraine and Israel and the surrounding areas). Further, the United States and other countries have imposed and may continue to impose new trade restrictions and export regulations, have levied tariffs and taxes on certain goods, and could significantly increase tariffs on a broad array of goods. For example, the current Trump administration has proposed or enacted tariffs and substantial changes to trade policies, which could adversely affect our business, including imposing tariffs on certain foreign products, most recently from China, that have and may result in retaliatory tariffs on U.S. goods and services. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. Moreover, negative macroeconomic conditions could adversely impact our ability to obtain financing in the future on terms acceptable to us, or at all. To date, the macroeconomic trends discussed above have not had a material adverse impact on our business, financial condition or results of operations. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed.

Components of Results of Operations

Revenue

On March 25, 2025, we entered into the Collaboration Agreement with Kaken. Under the terms of the Collaboration Agreement, we granted to Kaken an exclusive right to develop, manufacture and commercialize envu for dermatology indications in Japan, with options to expand the license, subject to opt-in payments and certain cost-sharing obligations on the part of Kaken, to include rheumatological and gastrointestinal diseases.

Pursuant to the terms of the Collaboration Agreement, we are responsible for the global development of envu in the dermatology field, and Kaken is responsible for the clinical development, regulatory approvals and commercialization of envu in Japan in dermatology and other indications for which Kaken has exercised its option. Kaken is required to use commercially reasonable efforts to conduct all subsequent development, manufacture, and commercialization activities. The Collaboration Agreement further provides that we will retain rights to envu in all other indications and geographies.

In March 2025, Kaken made an upfront, non-refundable payment of $20.0 million to us. In addition, Kaken will pay us an aggregate of $20.0 million towards global development costs of envu in the dermatology field through the end of 2026 and thereafter will pay a specified share of development costs applicable to the dermatology field, and for any field for which Kaken exercises its option, subject to Kaken's right to opt out of cost-sharing in certain indications in specified circumstances. In addition, Kaken would pay us up to an aggregate of $36.0 million upon the achievement of regulatory

milestones and upon Kaken's exercise of its field expansion options for the rheumatology and gastrointestinal fields. In addition, we are entitled to receive aggregate payments of up to ¥15.5 billion upon the achievement of commercial milestones, plus tiered royalties at percentages ranging from the low double digits into the twenties on aggregate net sales of envu in Japan.

Operating Expenses

Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses, and include ACELYRIN's operations subsequent to the Closing Date.

Research and Development Expenses

Research and development expenses consist of external and internal costs primarily related to acquiring and developing our research pipeline and technologies and clinical development of our product candidates.

External costs include:

Internal costs include:

We have acquired and may continue to acquire the rights to develop and commercialize new product candidates. Upfront and milestone payments are accrued for and expensed as in process research and development assets expense when the achievement of the milestone is probable up to the point of regulatory approval and, absent obtaining such approval, have no alternative future use. Milestone payments made after a product's regulatory approval will be capitalized and amortized over the remaining useful life of the related product.

We expense research and development costs as incurred. Costs of certain activities are recognized based on an evaluation of the progress to completion of specific tasks. However, payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized as research and development prepaid expenses in our consolidated balance sheets. The capitalized amounts are recognized as expense as the goods are delivered or services are performed. Since our inception and through June 30, 2025, our external research and development expenses were primarily related to the discovery and advancement of programs under our TYK2 platform, including our two most advanced product candidates, envu and A-005. We use internal resources primarily for managing our research, process development, manufacturing and clinical development activities. In particular, with respect to internal costs, we deploy our personnel across all of our research and development activities as our employees work across multiple programs, and therefore the costs cannot be allocated to a particular product candidate or research program.

We expect our research and development expenses to increase substantially for the foreseeable future as we advance our product candidates into and through clinical trials, pursue regulatory approval of our product candidates, build our operational and commercial capabilities for marketing our products, if approved, and expand our pipeline of product candidates. The process of conducting the necessary clinical research to obtain regulatory approval is time-consuming, expensive and uncertain. The actual probability of success for our product candidates may be affected by a variety of factors, including the safety and efficacy of our product candidates, clinical data, investment in our clinical programs, competition, manufacturability and commercial viability. It is possible that we may never receive regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion of costs of our research and development projects or if, when and to what extent we will generate revenue from the commercialization and sale of our product candidates, if approved by the FDA and other comparable foreign regulatory authorities.

Our future research and development costs may vary significantly based on factors such as:

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate.

General and Administrative Expenses

Our general and administrative expenses consist primarily of personnel-related costs, legal and consulting services, including those relating to intellectual property and corporate matters, marketing expenses and allocated facilities and other overhead costs, including software licenses, computer supplies, insurance and other miscellaneous expenses. Personnel-related costs include salaries, annual bonuses, benefits, travel and meal expenses and stock-based compensation expense for our general and administrative personnel.

We expect that our general and administrative expenses will increase substantially in the future as a result of expanding our operations, including hiring personnel, preparing for potential commercialization of our product candidates and facility occupancy costs, and integrating ACELYRIN's operations. We also expect an increase in costs associated with being a public company, including costs related to accounting, audit, legal, consulting fees, regulatory and tax-related services associated with maintaining compliance with applicable Nasdaq and SEC requirements, additional director and officer insurance costs, and investor and public relations costs.

Other Income (Expense)

Other income (expense) consists primarily of interest income, including amortization of premiums and accretion of discounts on marketable securities, gain on bargain purchase, and the change in fair value of derivative liability.

The gain on bargain purchase represents the excess of fair value of net assets acquired in the ACELYRIN Merger over the purchase consideration and was recognized as other income in the unaudited condensed consolidated statements of operations and comprehensive income (loss) as of the Closing Date of the ACELYRIN Merger.

In March 2024, in connection with our redeemable convertible preferred stock financings, we issued options to purchase additional shares of redeemable convertible preferred stock at a specified price, which were accounted for as derivative liabilities. Changes in fair value of these derivative liabilities were included in the other income (loss) in the condensed consolidated statement of operations and comprehensive income (loss) for each reporting period until the derivatives were exercised or expired.

Results of Operations and Comprehensive Income (Loss)

The following tables summarize our results of operations for the three and six months ended June 30, 2025 and 2024 (dollars in thousands):

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Revenue

For the three and six months ended June 30, 2025, we recognized license revenue of zero and $17.4 million, respectively, and service and other revenue of $2.7 million related to the Collaboration Agreement with Kaken. We expect to recognize development services and other revenue through the term of the Collaboration Agreement as the services are performed.

Research and Development Expenses

The following tables summarize our external and internal research and development expenses for the three and six months ended June 30, 2025 and 2024 (dollars in thousands):

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

Research and development expenses increased by $60.2 million, to $108.8 million for the three months ended June 30, 2025, from $48.6 million for the three months ended June 30, 2024.

CRO, CMO and clinical trials expenses increased by $39.2 million, to $66.1 million for the three months ended June 30, 2025, from $26.8 million for the three months ended June 30, 2024, primarily due to an increase in clinical trial and CRO expenses related to the progression of our clinical trials for envu and other programs.

Professional consulting services expenses increased by $2.7 million, to $7.4 million for the three months ended June 30, 2025, from $4.8 million for the three months ended June 30, 2024, due to services to support our clinical trial for envu and other programs.

Other research and development costs decreased by $0.6 million, to $3.0 million for the three months ended June 30, 2025, from $3.6 million for the three months ended June 30, 2024, primarily due to the timing of preclinical studies.

Personnel-related costs increased by $16.7 million, to $26.8 million for the three months ended June 30, 2025, from $10.1 million for the three months ended June 30, 2024, primarily due to severance costs related to the ACELYRIN Merger and increased research and development headcount, and included an increase in stock-based compensation expense of $5.6 million resulting from equity awards assumed in the ACELYRIN Merger and additional stock options granted.

Facilities and overhead costs increased by $2.2 million, to $5.4 million for the three months ended June 30, 2025, from $3.2 million for the three months ended June 30, 2024, primarily due to an increase in software license costs and information technology, and facilities expenses allocated to research and development activities.

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

Research and development expenses increased by $114.9 million, to $205.4 million for the six months ended June 30, 2025, from $90.5 million for the six months ended June 30, 2024.

CRO, CMO and clinical trials expenses increased by $80.0 million, to $131.2 million for the six months ended June 30, 2025, from $51.1 million for the six months ended June 30, 2024 primarily due to an increase in clinical trial and CRO expenses related to the progression of our clinical trials for envu and other programs and an increase in CMO expenses associated with manufacturing of clinical supplies to support our trials.

Professional consulting services expenses increased by $5.5 million, to $13.8 million for the six months ended June 30, 2025, from $8.3 million for the six months ended June 30, 2024, due to services to support our clinical trial for envu and other programs.

Other research and development costs decreased by $0.3 million, to $5.3 million for the six months ended June 30, 2025, from $5.6 million for the six months ended June 30, 2024, primarily due to timing of preclinical studies.

Personnel-related costs increased by $25.3 million, to $44.5 million for the six months ended June 30, 2025, from $19.2 million for the six months ended June 30, 2024, primarily due to severance costs related to the ACELYRIN Merger and increased research and development headcount, and included an increase in stock-based compensation expense of $7.9 million resulting from equity awards assumed in the ACELYRIN Merger and additional stock options granted.

Facilities and overhead costs increased by $4.3 million, to $10.6 million for the six months ended June 30, 2025, from $6.3 million for the six months ended June 30, 2024, primarily due to an increase in software license costs and information technology, and facilities expenses allocated to research and development activities.

External Costs by Program

The following table summarizes our external costs by program for the three and six months ended June 30, 2025 and 2024 (dollars in thousands):

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General and Administrative Expenses

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

General and administrative expenses increased by $26.9 million, to $34.5 million for the three months ended June 30, 2025, from $7.6 million for the three months ended June 30, 2024.

Personnel-related expenses increased by $17.7 million, to $21.6 million for the three months ended June 30, 2025, from $3.9 million for the three months ended June 30, 2024, primarily due severance costs related to the ACELYRIN Merger and increased general and administrative headcount, and included an increase in stock-based compensation expense of $9.9 million resulting from equity awards assumed in the ACELYRIN Merger and additional stock options granted.

Professional consulting services expenses increased by $9.9 million, to $12.8 million for the three months ended June 30, 2025, from $2.8 million for the three months ended June 30, 2024, primarily due to ACELYRIN Merger transaction costs, and an increase in consulting, legal, accounting, audit and tax services to support our growth, public company requirements and business development.

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

General and administrative expenses increased by $43.5 million, to $56.7 million for the six months ended June 30, 2025, from $13.2 million for the six months ended June 30, 2024.

Personnel-related expenses increased by $21.6 million, to $28.9 million for the six months ended June 30, 2025, from $7.4 million for the six months ended June 30, 2024, primarily due to severance costs related to the ACELYRIN Merger and increased general and administrative headcount, and included an increase in stock-based compensation expense of $12.0 million resulting from equity awards assumed in the ACELYRIN Merger and additional stock options granted.

Professional consulting services expenses increased by $22.4 million, to $27.2 million for the six months ended June 30, 2025, from $4.8 million for the six months ended June 30, 2024, primarily due to ACELYRIN Merger transaction costs, and an increase in consulting, legal, accounting, audit and tax services to support our growth, public company requirements and business development.

Other Income (Expense), Net

Other income (expense), net increased by $191.7 million, to $191.3 million other income, net for the three months ended June 30, 2025, from $0.4 million other expense, net for the three months ended June 30, 2024. Other income (expense), net increased by $196.5 million, to $193.9 million other income, net for the six months ended June 30, 2025, from $2.6 million other expense, net for the six months ended June 30, 2024.

Gain on bargain purchase was $187.9 million for the three and six months ended June 30, 2025 as compared to zero for the three and six months ended June 30, 2024, and represents the excess of fair value of net assets acquired in the ACELYRIN Merger over the purchase consideration on the Closing Date.

Interest income increased by $1.5 million, to $3.4 million for the three months ended June 30, 2025, from $2.0 million for the three months ended June 30, 2024, primarily as a result of higher balances of cash equivalents and marketable securities. Interest income increased by $3.2 million, to $6.0 million for the six months ended June 30, 2025, from $2.8 million for the six months ended June 30, 2024, primarily as a result of higher balances of cash equivalents and marketable securities.

We recognized a change in fair value of a derivative liability loss of $2.3 million and $5.4 million for the three and six months ended June 30, 2024, respectively related to the derivative liability recognized in connection with our Series C redeemable convertible preferred stock financing entered into in March 2024. The derivative liability was re-measured at fair value and settled in May 2024, when we closed the second tranche of the Series C financing. See Note 4 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Income Tax Benefit

Income tax benefit was $8.6 million for the three and six months ended June 30, 2025 as compared to zero for the three and six months ended June 30, 2024. The income tax benefit was related to the realization of deferred tax assets and valuation allowance release as a result of the ACELYRIN Merger.

Liquidity, Capital Resources and Capital Requirements

Sources of Liquidity

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. To date, we have primarily funded our operations through the issuance of common stock, including in our IPO and Concurrent Private Placement, the issuance of redeemable convertible preferred stock and convertible promissory notes in private placements and, most recently, the acquisition of cash, cash equivalents and marketable securities in connection with the ACELYRIN Merger and payments received under our Collaboration Agreement with Kaken.

Based on our current operating plan, our existing cash, cash equivalents and marketable securities of $486.3 million as of June 30, 2025, will be sufficient to meet our operating and capital requirements for at least 12 months from the date of issuance of the unaudited condensed consolidated financial statements included in Part I. Item 1. of this Quarterly Report on Form 10-Q. We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates. We may never achieve profitability, and unless we do and until then, we will need to continue to raise additional capital. We will need to raise significant additional capital to fund ongoing research and development activities and maintain future operations. We plan to monitor expenses and may raise additional capital through a combination of public and private equity, debt financings, strategic alliances, and licensing arrangements. Our ability to access capital when needed is not assured and, if capital is not available to us when, and in the amounts, needed, on the terms which are favorable, we could be required to delay, scale back, or abandon some or all of our planned development programs and other operations, which could materially harm our business, financial condition and results of operations.

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Future Funding Requirements

Our primary uses of cash are to fund our operations, which consist primarily of research and development expenditures related to our programs and, to a lesser extent, general and administrative expenditures. We anticipate that we will continue to incur significant and increasing expenses for the foreseeable future as we continue to advance our product candidates, expand our corporate infrastructure, including the costs associated with being a public company, further our research and development initiatives for our product candidates, and incur costs associated with potential commercialization. In addition, we anticipate committing substantial capital resources to the integration and development activities related to the acquired ACELYRIN business. We are subject to all of the risks typically related to the development of new drug candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial additional funding in connection with our continuing operations.

We do not have any products approved for sale and have not generated any revenue from product sales since our inception. We do not expect to generate revenue from any product candidates that we develop until we obtain regulatory approval for one or more of such product candidates and commercialize our products or enter into collaboration agreements with third parties. Because of the numerous risks and uncertainties associated with biopharmaceutical product development, we may never achieve or sustain profitability and, unless and until we are able to develop and commercialize our product candidates, we will need to continue to raise additional capital. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through public or private equity or debt financings, or potentially other capital sources, such as collaboration or licensing arrangements with third parties or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing to support our business plans when needed on acceptable 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 additional funds through collaboration or licensing arrangements with third parties or other strategic transactions, we may have to relinquish rights to our intellectual property, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise capital as and when needed, or on attractive terms, we may have to significantly delay, reduce, or discontinue the development and commercialization of our product candidates or scale back or terminate our pursuit of new in-licenses and acquisitions.

Because of the numerous risks and uncertainties associated with research, development and commercialization of our products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including the following:

Cash Flows

The following table summarizes our cash flows for the six months ended June 30, 2025 and 2024 (in thousands):

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Operating Activities

Net cash used in operating activities was $186.7 million and $96.5 million for the six months ended June 30, 2025 and 2024, respectively. Net cash used in operating activities for the six months ended June 30, 2025 was due to our net income (loss) for the period of $(39.6) million and non-cash items totaling $162.1 million partially offset by changes in operating assets and liabilities of $15.0 million. Non-cash items included $187.9 million related to gain on bargain purchase in connection with the ACELYRIN Merger and net accretion of discounts on marketable securities of $2.2 million, partially offset by $25.6 million related to stock-based compensation expense, $1.7 million related to depreciation and amortization and $0.6 million related to non-cash lease expense. The changes in operating assets and liabilities included an increase of $11.0 million in research and development accrued expenses, a decrease of $7.4 million in research and development prepaid expenses, an increase of $6.5 million in other accrued expenses and current liabilities, an increase of $2.6 million in deferred revenue, an increase of $0.2 million in other liabilities, non-current, and a decrease of $0.1 million in other prepaid expenses and other assets, partially offset by a decrease of $8.6 million in deferred income tax liability, an increase of $1.7 million in other assets, non-current, a decrease of $1.3 million in operating lease liabilities and a decrease of $1.2 million in accounts payable.

Net cash used in operating activities for the six months ended June 30, 2024 was due to our net income (loss) for the period of $(106.4) million and changes in operating assets and liabilities of $2.4 million, partially offset by non-cash items totaling $12.2 million. Non-cash items included $5.8 million related to stock-based compensation expense, $5.4 million related to the change in fair value of the derivative liability and $1.5 million related to depreciation and amortization, partially offset by net accretion of discounts on marketable securities of $0.5 million. The changes in operating assets and liabilities primarily include an increase of $10.5 million in research and development prepaid expenses, a decrease of $1.9 million in other accrued expenses and current liabilities, and a decrease of $1.0 million in operating lease liabilities, partially offset by an increase of $7.8 million in accounts payable and an increase of $3.6 million in research and development accrued expenses.

Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2025 of $168.8 million was related to proceeds from maturities of marketable securities of $144.3 million and cash, cash equivalents and restricted cash acquired in connection with the ACELYRIN Merger of $49.7 million, partially offset by purchases of marketable securities of $24.5 million and purchases of property and equipment of $0.7 million.

Net cash used in investing activities for the six months ended June 30, 2024 of $51.6 million was related to purchases of marketable securities of $59.0 million and purchases of property and equipment of $0.6 million, partially offset by proceeds from maturities of marketable securities of $8.0 million.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2025 of $0.8 million was primarily related to proceeds from the issuance of common stock under the 2024 ESPP.

Net cash provided by financing activities for the six months ended June 30, 2024 of $257.2 million was related to net proceeds of $258.5 million from the issuance of our Series C redeemable convertible preferred stock and related derivative

liability, net of issuance costs, and proceeds from issuance of common stock upon exercise of stock options of $0.5 million, partially offset by payments of deferred offering costs of $1.8 million.

Contractual Obligations and Commitments

Research and Development Agreements

We enter into contracts in the normal course of business with suppliers, CROs, CMOs and clinical trial sites. Upon the closing of the ACELYRIN Merger, we became the successor to contracts with non-cancellable obligations under ACELYRIN contracts. As of June 30, 2025 and December 31, 2024, the total value of non-cancellable obligations under contracts was $7.1 million and zero, respectively. This presentation of non-cancellable purchase obligations does not include any estimates of potential reduction of such liabilities related to mitigation obligations of the counterparties in the event of cancellation under the terms of our engagements.

FronThera Contingent Consideration

On March 5, 2021, we entered into a stock purchase agreement to acquire FronThera U.S. Holdings, Inc. and its wholly owned subsidiary, FronThera U.S. Pharmaceuticals LLC. The transaction was accounted for as an asset acquisition. Under the agreement, we are obligated to pay contingent consideration of up to an aggregate of $120.0 million based on the achievement of specified clinical and approval milestones, for up to an aggregate of $70.0 million payable for clinical milestones, and for up to an aggregate of $50.0 million payable for approval milestones, all related to technology acquired under the agreement. In the year ended December 31, 2022, we incurred and made a $37.0 million milestone payment for the first administration of envu to a patient enrolled in a Phase 2 clinical trial of envu, which was recorded in research and development expenses in the consolidated statement of operations and comprehensive income (loss). In July 2024, we met a milestone in connection with the first administration of envu to a patient enrolled in a Phase 3 clinical trial of envu and made a $23.0 million milestone payment in August 2024, which was recorded in research and development expenses in the consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2024. No other milestones were achieved or were probable of being achieved as of June 30, 2025.

License and Commercialization Agreement with Pierre Fabre

Upon the closing of the Merger Agreement, we became the successor to ACELYRIN's rights and obligations under the Pierre Fabre Agreement. We received certain exclusive worldwide licenses with the right to sublicense certain patents, know-how and other intellectual property to develop, manufacture, use and commercialize lonigutamab for non-oncology therapeutic indications. The license from Pierre Fabre extends to any product containing lonigutamab (excluding any fragments or derivatives) as its sole active ingredient (each, a "PF Licensed Product"). The Pierre Fabre Agreement prohibits us from using the licensed intellectual property in any antibody drug conjugate, multi-specific antibodies or any other derivatives of lonigutamab.

We are obligated to (i) make payments of up to $100.5 million upon the achievement of various development and regulatory milestones, (ii) make milestone payments of up to $390.0 million upon the achievement of certain commercial milestones, and (iii) pay tiered royalties in the high single-digit to low-teen percentages to Pierre Fabre on worldwide net sales in a given calendar year. Royalties will be payable for each PF Licensed Product in a given country during a period commencing upon the first commercial sale of such PF Licensed Product in such country and continuing until the latest of (a) 10 years after such first commercial sale, (b) expiration of last-to-expire valid claim in a licensed patent in such country and (c) expiration of regulatory exclusivity for such PF Licensed Product in such country. In the event we enter into a sublicense with a third party, we must also share with Pierre Fabre a percentage of any revenues from option fees, upfront payments, license maintenance fees, milestone payments or the like generated from the sublicense. Such percentage may be between the high single-digits to the low thirties based on which stage of development of a PF Licensed Product the sublicense relates to.

Unless earlier terminated, the Pierre Fabre Agreement will continue on a PF Licensed Product-by-PF Licensed Product and country-by-country basis until there are no more royalty payments owed to Pierre Fabre on any PF Licensed Product thereunder. Either party may terminate the Pierre Fabre Agreement upon an uncured material breach, or upon the bankruptcy or insolvency of the other party. Pierre Fabre may also terminate the agreement if we or any of our affiliates

institutes a patent challenge against the licensed patents from Pierre Fabre. We may also terminate the Pierre Fabre Agreement with or without cause upon nine months' prior written notice, so long as there is no ongoing clinical trial for any PF Licensed Product.

As of June 30, 2025 no milestones were probable and accrued in the unaudited condensed consolidated balance sheet.

Leases

We have operating lease arrangements for office and laboratory space in South San Francisco, California and office space in Southern California. As of June 30, 2025, we had total undiscounted lease payment obligations under non-cancelable leases of $56.9 million, including $4.3 million payable through December 31, 2025. See Note 9 to our unaudited condensed consolidated financial statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

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

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our unaudited condensed consolidated financial statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported expenses during the reporting period. Our critical accounting policies are described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Significant Judgments and Estimates" in the Annual Report on Form 10-K filed with the SEC on March 19, 2025. If actual results or events differ materially from the estimates and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. Significant changes to our critical accounting policies from those described in the Annual Report on Form 10-K are described below.

Business Acquisitions, Including Intangible Assets, Goodwill and Contingent Consideration

We account for business combinations, as defined in ASC Topic 805, Business Combinations, using the acquisition method of accounting, which generally requires that assets acquired, including IPR&D intangible assets, and liabilities assumed, be recorded at fair value on the consolidated balance sheets as of the acquisition date. The excess of the fair value of the purchase consideration over the fair value of net assets acquired, if any, is recorded as goodwill on the consolidated balance sheet. The excess of the fair value of net assets acquired over the fair value of the purchase consideration, if any, represents negative goodwill, or a gain on bargain purchase, which is recognized in the consolidated statement of operations as of the date of the acquisition.

Calculating the fair value of assets acquired and liabilities assumed requires us to make significant estimates and assumptions. As a result, we may record adjustments to the fair values within the measurement period, which may be up to one year from the acquisition date, with the corresponding offset to goodwill or a gain on bargain purchase.

Transaction costs associated with business combinations are expensed as they are incurred.

Intangible assets related to IPR&D projects acquired are considered to be indefinite-lived until abandonment or completion of the associated R&D efforts, which generally occurs when regulatory approval is obtained. Goodwill and indefinite-lived intangible assets are not amortized and, instead, are tested for impairment annually, in the fourth quarter, or more

frequently if events or changes in circumstances indicate that it is more likely than not that the assets are impaired. Development costs incurred after an acquisition are expensed as incurred

Intangible assets with finite useful lives, which include completed IPR&D projects, are amortized over their estimated useful lives, primarily on a straight-line basis, and are also periodically reviewed for changes in facts or circumstances that may result in an impairment or in a reduction to the estimated useful life of the asset.

In determining the initial fair value of an intangible asset, or when quantitative analysis is required to determine any impairment, we usually use an income approach that discounts expected future cash flows to present value using a discount rate that is based on the estimated weighted-average cost of capital for comparable companies and represents the rate that market participants would use to value the intangible asset. These cash flow models require the use of Level 3 fair value measurements and inputs, including estimated revenues, costs and probabilities of technical and regulatory milestones, among other factors.

If we are required to pay future consideration that is contingent upon the achievement of specified development, regulatory approval or sales-based milestone events, then the estimated fair value of contingent consideration liabilities is recognized in the consolidated balance sheet as of the date of the acquisition. Each reporting period thereafter, we revalue these obligations and records increases or decreases in their fair value on the consolidated statements of operations until such time that the payment is made or obligations expire.

Revenue Recognition

We earn revenue from collaboration agreements that allow collaborators to develop, manufacture and commercialize product candidates. Collaboration revenue is recognized in accordance with ASC 606. Arrangements with collaborators may include intellectual property licenses, research and development services, manufacturing services for clinical and commercial supply and participation in joint steering committees.

We recognize collaboration revenue in an amount that reflects the consideration that we expect to receive in exchange for those goods or services when our collaborator, or customer, obtains control of promised goods or services. We follow a five-step approach: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) the customer obtains control of the product or service.

At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within the contract to determine whether each promised good or service is a performance obligation. Performance obligations are promises in a contract to transfer a distinct good or service to the customer that (i) the customer can benefit from on its own or together with other readily available resources and (ii) are separately identifiable from other promises in the contract. Goods or services that are not individually distinct performance obligations are combined with other promised goods or services until such combined group of promises meet the requirements of a performance obligation.

We determine the transaction price based on the amount of consideration we are entitled to receive in exchange for the transfer of control of a product or a service to the customer. Consideration may be fixed, variable, or a combination of both. Payments to us under these arrangements typically include one or more of the following: non-refundable upfront payments, reimbursement for research services, payments for clinical supplies, research, development or regulatory milestone payments, profit-sharing arrangements, and royalty and commercial sales milestone payments. Variable consideration, such as performance-based milestones, are included in the total consideration if we expect to receive such consideration and if it is probable that the inclusion of the variable consideration will not result in a significant reversal in the cumulative amount of revenue recognized under the arrangement. We include cost reimbursements included the transaction price using the expected value method. We exclude sales-based royalty and milestone payments from the total consideration we expect to receive until the underlying sales occur because the license to our intellectual property is deemed to be the predominant item to which the royalties or milestones relate as it is the primary driver of value in the collaboration arrangements.

We then allocate the transaction price to each distinct performance obligation based on the relative standalone selling price. Key assumptions to determine the standalone selling price may include forecasted revenues, development timelines,

probabilities of technical and regulatory success, and the expected level of effort for research and development services. We recognize revenue associated with each performance obligation as the control over the promised goods or services transfer to our collaborators which occurs either at a point in time or over time. If control transfers over time, revenue is recognized by using a method of measuring progress that best depicts the transfer of goods or services. We evaluate the measure of progress and related inputs each reporting period and any resulting adjustments to revenue are recorded on a cumulative catch-up basis. Consideration allocated to options that include material rights is deferred until the options are exercised or expire.

We record amounts as accounts receivable when the right to consideration is deemed unconditional. Consideration received that does not meet the requirements to satisfy ASC 606 revenue recognition criteria is recorded as deferred revenue in the consolidated balance sheets, classified as either current (less than 12 months) or non-current (more than 12 months) deferred revenue based on our best estimate of when such revenue will be recognized.

Stock-Based Compensation Expense

We grant stock-based awards to employees, directors and non-employee consultants in the form of stock options to purchase shares of our common stock. We measure stock options granted with service-based vesting based on the fair value of the award on the grant date using the Black-Scholes option-pricing model. The model requires us to make a number of assumptions, including common stock fair value, expected volatility, expected term, risk-free interest rate and expected dividend yield. We expense the fair value of our stock-based compensation awards on a straight-line basis over the requisite service period, which is the period in which the related services are received.

We have also granted stock options with graded vesting based on market, service and performance conditions. At the grant date, the fair value of these stock options was estimated using a Monte Carlo simulation model, which uses a distribution of potential outcomes over the vesting period. The assumptions utilized in the calculation included our expected common stock price, expected volatility, risk-free rate and expected term. Stock-based compensation expense for these awards is recognized on a straight-line basis over the requisite service period, which is the longer of the explicit service period of the service condition and the derived service period of the market condition, as determined for each separately vesting portion of the awards as if each award was, in substance, multiple awards.

Stock-based compensation expense related to stock purchase rights under the 2024 ESPP is measured based on grant date at fair value using the Black-Scholes option-pricing model. The model requires us to make a number of assumptions, including common stock fair value, expected volatility, expected term, risk-free interest rate and expected dividend yield. Stock-based compensation expense is recognized on a straight-line basis over the offering period.

We account for award forfeitures as they occur and classify stock-based compensation expense in our consolidated statements of operations and comprehensive income (loss) in the same manner in which the award recipient's salary or services costs are classified.

Emerging Growth Company and Smaller Reporting Company Status

We are an "emerging growth company" as defined in the JOBS Act. Under the JOBS Act, an emerging growth company can take advantage of the extended transition period for complying with new or revised accounting standards and delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption from complying with new or revised accounting standards and, therefore, will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. 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.

Subject to certain conditions, as an emerging growth company, we may rely on certain of these exemptions, including without limitation exemptions to the requirements for (i) providing an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an emerging growth company until the earlier

to occur of (a) the last day of the fiscal year (A) following the fifth anniversary of the completion of our IPO, (B) in which we have total annual gross revenues of at least $1.235 billion or (C) in which we are deemed to be a "large accelerated filer" under the rules of the SEC, which means the market value of our common stock and non- voting common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, or (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We are also a "smaller reporting company," meaning that the market value of our common stock and non-voting common stock held by non-affiliates plus the aggregate amount of gross proceeds expected from our IPO was less than $700.0 million as of June 30, 2024, and our annual revenue was 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 common stock and non-voting common 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 common stock and non-voting common 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. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

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