Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Item 2. Management's discussion and analysis of financial condition and results of operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes and other financial information included in Part I of this Quarterly Report on Form 10-Q as well as our audited consolidated financial statements and related notes for the year ended December 31, 2025 included in our final prospectus dated June 17, 2026 filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended. This discussion and analysis and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements based upon our current plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, strategies, objectives, expectations, intentions and beliefs. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. You should carefully read the section titled "Risk Factors" to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

We are a clinical-stage precision therapeutics company developing medicines that target the root cause of specific cardiovascular diseases where no approved treatments exist. Our mission is to develop multiple targeted cardiovascular treatments in parallel that bring people with cardiovascular diseases closer to the cures they deserve. Our team is values-based and mission-driven, led by a proven and experienced management team applying a new philosophy to cardiovascular drug development. We have three late-stage programs, Danicamtiv, Ataciguat, and Tonlamarsen, in clinical development for indications for which no approved therapies currently exist. These programs are designed to create new standards of care for high-need patients.

Our management team, including leaders from MyoKardia, Inc. ("MyoKardia"), has deep-domain knowledge of, and proven ability to, navigate the complexity of cardiovascular disease and translate that insight into an innovative drug development approach, enhanced by proprietary data and analytics technology through our Prolaio platform, to deliver with exceptional speed and execution. We believe this uniquely enables us to apply a high degree of precision to cardiovascular drug development, targeting the root causes of disease, rather than later onset cardiovascular symptoms. By applying our differentiated understanding of cardiovascular clinical endpoints, prioritizing indications with high regulatory clarity and significant unmet need, and focusing on biology-led patient selection for our trials, we believe we are uniquely positioned to maximize our probability of clinical success and efficiently develop and deliver multiple novel medicines with the greatest possible therapeutic impact for patients and healthcare providers alike.

Cardiovascular disease is the leading cause of death worldwide, yet innovation has lagged due to drug development focused on broad, downstream, symptom-focused approaches despite disease heterogeneity and genetic variability. Furthermore, clinical trial design has depended on infrequent in-office measurements, failing to capture between visit changes that are critical to understanding cardiovascular disease, including symptoms and variability over time. These factors often result in development requiring lengthy, large and expensive outcomes trials with modest treatment effects. Kardigan's approach is designed to address these challenges through differentiated clinical trial designs with near real-time continuous data collection that enable more modern and efficient development, including reduced enrollment size and trial duration relative to traditional cardiovascular outcomes trials. The intended result is faster and more cost-effective trials designed to achieve a higher probability of success, although there is no guarantee that these results will be achieved.

Our mission is to apply Kardigan's purpose-built cardiovascular development model to advance multiple late-stage programs in parallel, targeting "3 in 4"-three high-impact medicines through pivotal studies in roughly four years, subject to regulatory approval-enabling a credible, standalone and attractive value-creation path. By executing with discipline across portfolio selection, development strategy and trial execution, we aim to deliver better patient outcomes and build a durable, fully integrated, leading cardiovascular-focused biotechnology company.

Our three late-stage programs include Danicamtiv, which we are developing for the treatment of genetic dilated cardiomyopathy ("DCM"), Ataciguat, which is aimed at slowing the progression of calcific aortic valve stenosis ("CAVS") in patients with moderate disease, and Tonlamarsen, which we are developing for the management of blood pressure ("BP") in acute severe hypertension ("ASH") post-hospitalization. Each of these medicines is designed specifically for well-defined patient populations with well-defined regulatory pathways. In the second quarter, we randomized the first patient in the KARDINAL-ASH Phase 2 clinical trial that is evaluating Tonlamarsen for the management of blood pressure in acute severe hypertension ("ASH") post-hospitalization. Additionally, in July, we completed enrollment of Cohort 1 (myosin heavy chain

7, MYH7, and titin, TTN, patients) of the Phase 2b KINSHIP-DCM clinical trial and enrollment of the Phase 3 portion is now underway. We expect to report clinical data from our three late-stage programs in the first half of 2027: Danicamtiv Phase 2b topline data from the KINSHIP-DCM trial, Ataciguat Phase 2b topline data (interim 24-week analysis) from the KATALYST-AV trial and Tonlamarsen Phase 2 topline data in the KARDINAL-ASH trial.

Since our inception, we have not generated any revenue from product sales or other sources and have incurred significant operating losses and negative cash flows from our operations. Our primary uses of cash to date have been conducting research and development, acquisitions, building infrastructure, developing intellectual property, hiring personnel and providing general and administrative support for our expanding operations. To date, we have funded our operations primarily through private placements of our redeemable convertible preferred stock and, most recently, through the net proceeds from our initial public offering ("IPO").

We have incurred operating losses since our inception. Our net losses were $172.3 million and $75.5 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $453.4 million. Our operating results also reflect significant period-over-period and year-over-year increases in research and development and general and administrative expenses, driven by the progression of our therapeutic programs, increased headcount, integration of acquired assets, and expanded clinical and operational activities. We expect our expenses and operating losses will increase substantially as we advance our three late-stage candidates clinical development and seek regulatory approvals, manufacture drug product and drug supply, maintain and expand our intellectual property portfolio, as well as hire additional personnel, pay for further accounting, audit, legal, regulatory and consulting services, and pay costs associated with director and officer liability insurance, investor and public relations activities and other expenses associated with operating as a public company.

In addition, we have preclinical and clinical development, regulatory and commercial milestone payment obligations under our licensing arrangements. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our preclinical studies and our ongoing and planned clinical trials and our expenditures on other research and development activities. Furthermore, we expect to incur additional costs associated with operating as a public company.

On June 22, 2026, we completed our IPO and issued 28,750,000 shares of common stock, including 3,750,000 shares pursuant to the full exercise of the underwriters' option to purchase additional shares, at a price of $16.00 per share. In connection with the IPO, we received net proceeds of $422.4 million, after deducting $32.2 million in underwriting discounts and commissions, and $5.4 million in other offering costs.

As of June 30, 2026, we had cash, cash equivalents and investments of $660.7 million. Based on our current operating plan, we believe that our existing cash, cash equivalents and investments will be sufficient to fund our operations for at least the next 12 months from the date of this Quarterly Report on Form 10-Q. See the section titled "-Liquidity and Capital Resources."

We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our current or future product candidates, which will not be for at least the next several years, if ever. If we obtain regulatory approval for any of our current or future product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, until such time as we can generate significant revenue from sales of our current or future product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. See the section titled "-Liquidity and Capital Resources." However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market current or future product candidates that we would otherwise prefer to develop and market ourselves.

Components of results of operations

Revenue

We currently have no products approved for sale, and we have not generated any revenue to date. In the future, we may generate revenue from collaboration or license agreements we may enter into with respect to our current or future product candidates, as well as product sales from any approved product, which approval we do not expect to occur for at least the next several years, if ever. Our ability to generate product revenue will depend on the successful development and eventual commercialization of any current or future product candidates we may pursue. If we fail to complete preclinical and clinical development of our current or future product candidates or obtain regulatory approval for them, our ability to generate future revenues and our results of operations and financial position would be adversely affected.

Operating expenses

Research and development expenses

Research and development expenses consist primarily of internal and external costs associated with our research and development activities, our discovery and research efforts and the preclinical and clinical development of our current and future product candidates. In particular, our research and development expenses include personnel-related costs, including stock-based compensation for employees engaged in research and development functions, manufacturing costs for our product candidates, including fees paid to contract manufacturing organizations ("CMOs"), expenses incurred under arrangements with third parties such as contract research organizations ("CROs"), costs associated with developing and validating our manufacturing process for use in our preclinical studies and ongoing and future clinical trials, costs incurred to obtain licenses to intellectual property and any future payments related to development or regulatory milestones thereto, expenses related to compliance with regulatory requirements and the research and development of our Prolaio platform, internal research and development preclinical costs, and direct and allocated overhead costs for laboratory supplies, research materials, reagents, facility costs, depreciation and other expenses.

We expense research and development costs as incurred. Non-refundable advance payments for future research and development services are recorded as prepaid expenses and recognized as the related goods are delivered or the services are performed. We record accruals for research costs based on estimates of work performed, invoices received and contracted costs, updating these estimates as additional information becomes available from our third-party service providers.

A significant portion of our research and development costs are external costs, which we track on a product candidate-by-product candidate basis once a preclinical asset is designated as a product candidate. Due to our ability to use certain resources across several programs, personnel-related expenses and indirect or shared operating costs incurred for our research and development programs are not recorded or maintained on a product candidate-by-product candidate basis.

We expect our research and development expenses to increase substantially for the foreseeable future as we continue to conduct our ongoing research and development activities, expand our pipeline, advance our preclinical research programs toward clinical development and conduct our current and planned clinical trials. The timing and amount of these expenses are inherently difficult to predict, and we make funding determinations for each program on an ongoing basis based on preclinical and clinical results, regulatory developments and ongoing assessments of each program's commercial potential.

Our future development costs may vary significantly depending on the scope, timing and outcome of clinical development and regulatory review for Danicamtiv, Ataciguat, Tonlamarsen and any future product candidates, our ability to maintain or establish CMO and other third-party arrangements, milestone and collaboration-based payments, and the costs of developing our Prolaio platform. For example, if the FDA, the European Medicines Agency (the "EMA") or another regulatory authority were to require clinical trials beyond those we currently anticipate, or if we experience significant delays in patient enrollment, we would be required to expend significant additional financial resources and time on the completion of clinical development.

General and administrative expenses

General and administrative expenses consist primarily of personnel-related costs, including salaries, bonuses, benefits and stock-based compensation charges for those individuals in executive, legal, finance, human resources, facility operations and other administrative functions. Other significant costs include legal fees relating to intellectual property and corporate matters, professional fees for auditing, accounting, tax and consulting services, office and information technology costs, insurance costs, and facilities, depreciation and other general and administrative expenses, which include direct or allocated expenses for rent and maintenance of facilities and utilities.

We anticipate that our general and administrative expenses will increase for the foreseeable future to support our increased research, development and commercialization activities. These increases will likely include costs related to the hiring of additional personnel and fees paid to outside consultants, pre-launch costs and regulatory filing fees, among other expenses. We also anticipate increased expenses related to audit, accounting, legal, regulatory and tax-related services associated with maintaining compliance with the stock exchange and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.

Change in fair value of contingent milestone liabilities

Change in fair value of contingent milestone liabilities reflects the remeasurement of potential future payments due upon our achievement of specified market valuation thresholds within defined contractual periods. These obligations are recorded as liabilities at fair value and remeasured each reporting period, with changes in fair value recognized in our condensed consolidated statements of operations and comprehensive loss. This measurement relies on estimates, including the probability and timing of milestone achievement and expected future Company valuations, and may fluctuate significantly as these estimates and market conditions change.

Other income (expense)

Other income (expense) primarily consists of interest income generated from interest bearing cash, cash equivalents and investments, change in fair value associated with the financial instruments, and various income or expense items. These amounts may fluctuate significantly from period to period due to changes in market conditions, interest rates, the timing of financing transactions, and the remeasurement of instruments carried at fair value, and therefore may not be indicative of future results.

Income tax benefit

Since we generally establish a full valuation allowance against our deferred tax balances, our income tax benefit primarily consists of tax impacts of our deferred income tax assessments resulting from our acquisitions.

Results of operations

Comparison of the three months ended June 30, 2026 and 2025:

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

Research and development expenses

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

Research and development expenses were $56.4 million for the three months ended June 30, 2026, compared to $35.8 million for the three months ended June 30, 2025, representing an increase of $20.6 million period over period. This increase was primarily driven by an increase in total program expenses, reflecting expanded clinical activity across our pipeline. Danicamtiv program expenses increased by $12.3 million, reflecting the initiation of the Phase 2b/3 clinical trial in October 2025. Ataciguat and Tonlamarsen programs spending was relatively flat, as development activities continued at a consistent level.

In addition to program expenses, our compensation and benefits expenses for personnel engaged in research and development efforts increased by $3.7 million, largely attributable to the headcount growth supporting our expanding research and development operations. The remaining $5.2 million increase in other research and development expenses mainly consisted of $2.5 million of higher outside consulting costs and $1.4 million of acquired IPR&D expense.

General and administrative expenses

General and administrative expenses were $18.9 million for the three months ended June 30, 2026, compared to $21.3 million for the three months ended June 30, 2025, representing a decrease of $2.4 million period over period. The decrease was primarily driven by one-time stock-based compensation expense related to integration bonus of $11.7 million recognized in general and administrative expenses for three months ended June 30, 2025, offset by $8.2 million of higher personnel-related costs and $1.1 million of higher other expenses, including professional services, insurance, facilities-related costs and other corporate overhead.

Change in fair value of contingent milestone liabilities

Change in fair value of contingent milestone liabilities was $43.5 million for the three months ended June 30, 2026, primarily driven by the increase in our market valuation following the completion of our IPO in June 2026, which increased the probability of achieving our market valuation thresholds underlying the amended milestones. No change in fair value of contingent milestone liabilities was recognized for the three months ended June 30, 2025.

Interest income

Interest income was $2.8 million for the three months ended June 30, 2026, compared to $1.1 million for the three months ended June 30, 2025. The increase of $1.7 million period over period was primarily attributable to higher average balances of cash, cash equivalents and investments following the proceeds from our initial public offering and from redeemable convertible preferred stock issuances completed after June 30, 2025.

Change in fair value of preferred stock tranche obligations

Change in fair value of Series A redeemable convertible preferred stock tranche obligations was a loss of $1.3 million for the three months ended June 30, 2025, related to the remeasurement of the Second Tranche obligation prior to its closing. The Second Tranche of the Series A Preferred Stock closed in August 2025, and accordingly, no change in fair value was recorded for the three months ended June 30, 2026.

Comparison of the six months ended June 30, 2026 and 2025:

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

Research and development expenses

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

Research and development expenses were $101.4 million for the six months ended June 30, 2026, compared to $54.6 million for the six months ended June 30, 2025, representing an increase of $46.8 million period over period. This increase was primarily driven by an increase in total program expenses, reflecting expanded clinical activity across our pipeline. Ataciguat program expenses increased by $6.8 million, primarily due to the initiation and ramp-up of the Phase 2b clinical trial commencing in June 2025. Danicamtiv program expenses increased by $22.7 million, reflecting the initiation of the Phase 2b/3 clinical trial in October 2025. Tonlamarsen program spending was relatively flat, as development activities continued at a consistent level.

In addition to program expenses, our compensation and benefits expenses for personnel engaged in research and development efforts increased by $9.8 million, largely attributable to the headcount growth supporting our expanding research and development operations. The remaining $8.0 million increase in other research and development expenses mainly consisted of $4.0 million of higher outside consulting costs, $2.5 million of higher facilities costs, $1.7 million of additional depreciation and amortization expenses.

General and administrative expenses

General and administrative expenses were $32.5 million for the six months ended June 30, 2026, compared to $28.6 million for the six months ended June 30, 2025, representing an increase of $3.9 million period over period. The increase was primarily driven by $12.2 million of higher personnel-related costs and $3.4 million of higher other expenses, including professional services, insurance, facilities-related costs and other corporate overhead, offset by one-time stock-based compensation expense related to integration bonus of $11.7 million recognized in general and administrative expenses for three months ended June 30, 2025.

Change in fair value of contingent milestone liabilities

Change in fair value of contingent milestone liabilities was $43.5 million for the six months ended June 30, 2026, primarily driven by the increase in our market valuation following the completion of our IPO in June 2026, which increased the probability of achieving our market valuation thresholds underlying the amended milestones. No change in fair value of contingent milestone liabilities was recognized for the six months ended June 30, 2025.

Interest income

Interest income was $5.6 million for the six months ended June 30, 2026, compared to $1.9 million for the six months ended June 30, 2025. The increase of $3.7 million period over period was primarily attributable to higher average balances of cash, cash equivalents and investments following the proceeds from our initial public offering and redeemable convertible preferred stock issuances completed after June 30, 2025.

Change in fair value of preferred stock tranche obligations

Change in fair value of Series A redeemable convertible preferred stock tranche obligations was a loss of $3.9 million for the six months ended June 30, 2025, related to the remeasurement of the Second Tranche obligation prior to its closing. The Second Tranche of the Series A Preferred Stock was closed in August 2025, and accordingly, no change in fair value was recorded for the six months ended June 30, 2026.

Bargain purchase gain

The bargain purchase gain of $5.2 million for the six months ended June 30, 2025 was related to the bargain purchase gain recognized upon the acquisition of Prolaio, Inc. in February 2025.

Income tax benefit

In the six months ended June 30, 2025, we recorded an income tax benefit of $4.2 million due to deferred tax liabilities assumed in connection with our acquisition of Prolaio, Inc., which supported the realizability of our deferred tax assets and resulted in a partial release of our valuation allowance.

Liquidity and capital resources

Sources of liquidity

Since our inception, we have incurred significant operating losses and negative cash flows from operations. We expect to incur significant expenses and operating losses for the foreseeable future as we advance our pipeline and develop our Prolaio platform. Since the completion of our IPO, we have incurred, and expect to incur additional costs associated with operating as a public company. We have funded our operations to date principally through private placements of our redeemable convertible preferred stock and, most recently, through the net proceeds of our IPO. From our inception through June 30, 2026, we have received aggregate gross proceeds of $568.3 million from the sale of our redeemable convertible preferred stock in private placements. On June 22, 2026, we completed our IPO and issued 28,750,000 shares of common stock, including 3,750,000 shares pursuant to the full exercise of the underwriters' option to purchase additional shares, at a price of $16.00 per share. In connection with the IPO, we received net proceeds of $422.4 million, after deducting $32.2 million in underwriting discounts and commissions, and $5.4 million in other offering costs. We have not generated any revenue or received cost-sharing payments under collaboration or licensing agreements.

Future funding requirements

As of June 30, 2026, we had cash, cash equivalents and investments of $660.7 million. Based on our current operating plan, we believe that our existing resources will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. Our forecast for 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 actual results could vary materially. Additionally, the process of conducting preclinical studies and testing product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain. We will need to raise substantial additional capital in the future.

Our future capital requirements will depend on many factors, including but not limited to:

Until such time, if ever, as we can generate substantial product revenue to support our cost structure, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, potentially including collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other 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 have to relinquish valuable rights to our technologies, future revenue streams, research programs, current or future product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise additional funds through equity or debt financings 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 current and future product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

Cash flows

Comparison of the six months ended June 30, 2026 and 2025

The following table sets forth a summary of the net cash flow activity for the six months ended June 30, 2026 and 2025 (in thousands):

Operating activities

For the six months ended June 30, 2026, net cash used in operating activities was $107.3 million, compared to $52.8 million for the six months ended June 30, 2025. The $54.5 million increase in operating cash usage primarily reflects our expanded operating scale, continued advancement of our development portfolio and organizational growth to support these initiatives.

Net cash used in operating activities for the six months ended June 30, 2026 was $107.3 million, primarily driven by our net loss of $172.3 million partially offset by adjustments to the net loss totaling $61.9 million. The adjustments to the net loss included change in fair value of contingent milestone liabilities of $43.5 million, stock-based compensation expense of $17.1 million, depreciation and amortization expense of $3.2 million, acquired IPR&D expense of $1.4 million and amortization of right-of-use assets of $1.1 million, partially offset by amortization of premiums and accretion of discounts on investments by $1.8 million and other non-cash charges of $2.6 million. Operating cash flows were further impacted by $3.1 million of net cash inflows due to changes in operating assets and liabilities.

Net cash used in operating activities for the six months ended June 30, 2025, was $52.8 million, primarily driven by our net loss of $75.5 million partially offset by adjustments to the net loss totaling $18.3 million. The adjustments to the net loss included non-cash charges of $14.4 million related to integration bonus expense, $7.2 million related to stock-based compensation expense, and $3.9 million related to the change in fair value of preferred stock tranche obligations, and non-cash gains, including bargain purchase gain of $5.2 million and deferred income tax benefit of $4.2 million. Changes in operating assets and liabilities resulted in an additional $4.4 million in net cash inflows.

Investing activities

Net cash used in investing activities was $54.9 million for the six months ended June 30, 2026, compared to $6.6 million net cash used in investing activities for the six months ended June 30, 2025.

Cash used in investing activities for the six months ended June 30, 2026 consisted primarily of $50.0 million of net purchases of investments, partially offset by $2.8 million of capitalized software development costs and $2.1 million used to purchase property and equipment to support the expansion of our laboratory, and corporate infrastructure.

For the six months ended June 30, 2025, net cash used in investing activities was $6.6 million, primarily reflecting the cash portion of the consideration paid for the acquisition of Prolaio, Inc. of $4.0 million and $2.6 million used to purchase property and equipment.

Financing activities

Net cash provided by financing activities was $437.2 million for the six months ended June 30, 2026, compared to $100.2 million for the six months ended June 30, 2025. Financing activities for the six months ended June 30, 2026 consisted primarily of IPO proceeds of $427.8 million, net of underwriters' commissions, $1.8 million of offering costs paid, and $10.0 million of proceeds from issuance of preferred stock. For the six months ended June 30, 2025, financing activities consisted primarily of $100.0 million from issuance of preferred stock, net of issuance costs.

Contractual obligations and commitments

Leases

We lease office space in South San Francisco, California under an operating lease that expires in April 2030 and lease office space in Princeton, New Jersey under an operating lease that expires in March 2033. See Note 7, "Leases" in our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for more information on our lease obligations.

Purchase and other obligations

We enter into contracts in the normal course of business with third-party CROs, CMOs and other third-party vendors for preclinical, clinical trials and testing and manufacturing services. These contracts do not contain minimum purchase commitments and are cancellable by us upon written notice. Payments due upon cancellation generally consist of payments for services provided or expenses incurred up to the date of cancellation, including non-cancelable obligations of our service providers and, in some cases, wind-down costs. For further information regarding certain of our license agreements and amounts that could become payable in the future under those agreements, please see Note 8, "Commitments and Contingencies" in our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Merger agreements

Acquisition of Prolaio, Inc.

On February 24, 2025, we entered into an Agreement and Plan of Merger (the "Original Prolaio Merger Agreement"), as amended by Amendment No. 1 (as defined below) (together, the "Amended Prolaio Merger Agreement"), with Prolaio, Inc., pursuant to which we acquired 100% of the outstanding capital stock of Prolaio, Inc. Upon the consummation of the merger, Prolaio, Inc. became our wholly-owned subsidiary. Through the acquisition of Prolaio, Inc., we gained access to Prolaio, Inc.'s cardiovascular data collection and analytics platform. The total purchase consideration transferred was approximately $8.6 million, consisting of approximately $4.0 million in cash, primarily used to settle certain of Prolaio, Inc.'s outstanding debts, and fair value of contingent consideration of $4.6 million, representing the estimated acquisition date fair value of milestone payments. Pursuant to the Original Prolaio Merger Agreement, the former stockholders of Prolaio, Inc. were entitled to an aggregate of up to $200 million in milestone payments, which were payable as follows: (i) up to $50 million upon (A) our completion of a qualifying Phase 2 or Phase 3 clinical trial, (B) there being at least 500 Kardigan clinical trial patients managed and screened by Prolaio, (C) our achievement of annual gross revenues of $15 million from the sale of Prolaio products and services and (D) Prolaio achieving improvements in patient screening rates; (ii) up to $100 million upon (A) our completion of a qualifying Phase 2 or Phase 3 clinical trial, (B) there being at least 1,500 Kardigan clinical trial patients managed and screened by Prolaio, (C) our achievement of annual gross revenues of $25 million from the sale of Prolaio products and services and (D) Prolaio's achievement of improvements in patient screening rates; (iii) up to $200 million upon (A) our completion of a qualifying Phase 2 or Phase 3 clinical trial, (B) there being at least 5,000 Kardigan clinical trial patients managed and screened by Prolaio, (C) our achievement annual gross revenues of $25 million from the sale of Prolaio products and services and (D) Prolaio's achievement of improvements in patient screening rates; (iv) up to $200 million upon (A) our completion of a qualifying Phase 2 or Phase 3 clinical trial and (B) our achievement of annual net sales of $50 million from the sale of Prolaio products and services; and (v) 50% of Eligible Payments (as defined below) upon (A) our completion of a qualifying Phase 2 or Phase 3 clinical trial and (B) the execution of a commercial transaction for Prolaio products and services that results in payments to Kardigan, as calculated in accordance with terms of the Original Prolaio Merger Agreement ("Eligible Payments"); in each case excluding intercompany transactions, to the extent such milestones are achieved on or before February 28, 2029.

We concluded that Prolaio, Inc. constitutes a business and the transaction was accounted for as a business combination. In connection with the acquisition, we recorded $13.8 million of net assets acquired, primarily consisting of developed technology with a fair value of $25.4 million, acquired IPR&D asset with a fair value of $1.1 million, and $13.8 million in liabilities assumed, including $4.5 million of deferred income tax liability and $3.3 million of assumed contingent consideration liability. Because the fair value of net identifiable assets acquired exceeded the fair value of the consideration transferred, we recognized a gain on bargain purchase in an amount of $5.2 million in the condensed consolidated statement of operations and comprehensive loss for the three months ended June 30, 2025 and for the year ended December 31, 2025. The bargain purchase gain reflects our ability to acquire Prolaio at a purchase price below the fair value of the acquired net assets due to a combination of factors, including Prolaio's limited operating scale, historical operating losses, liquidity constraints at the time of the transaction, and the structure of the consideration transferred. In particular, concurrent with the acquisition, we entered into integration bonus arrangements with our Chief Executive Officer and Chief Medical Officer

("Integration Bonus"), both of whom were cofounders and Prolaio shareholders. These arrangements were contingent upon post-combination services and successful integration and, accordingly, were accounted for as compensation expense rather than consideration transferred.

In May 2026, we entered into Amendment No. 1 to Agreement and Plan of Merger ("Amendment No. 1") with the former stockholders of Prolaio, Inc. in order to amend the milestone provisions applicable to such stockholders, including Mr. Gianakakos and Dr. Edelberg. In particular, the milestones were revised to: (i) better align the incentives of the former stockholders of Prolaio, Inc., in their capacities as executive officers and employees of Kardigan, with the creation of stockholder value for us and (ii) better reflect our current operations and strategic direction following the acquisition, including our focus on deploying the Prolaio platform in support of its own clinical trials, and to ensure that the milestones remained aligned with our business.

Pursuant to the Amended Prolaio Merger Agreement and subject to the conditions therein, the former stockholders of Prolaio, Inc., including Mr. Gianakakos and Dr. Edelberg, are entitled to milestone payments as follows: (i) up to $50 million upon our achievement of a valuation equal to or greater than $5.0 billion; (ii) up to $50 million upon our achievement of a valuation equal to or greater than $6.0 billion; and (iii) up to $100 million upon our achievement of a valuation equal to or greater than $12.0 billion; in each case to the extent such milestones are achieved on or before May 1, 2032. Such milestone payments shall be payable in cash or shares of our common stock, at our election.

Prior to the Prolaio amendment, changes in the fair value of the contingent consideration were recognized in R&D expenses in the condensed consolidated statements of operations and comprehensive loss. Subsequent to the Prolaio amendment, changes in the fair value of the contingent milestone liabilities are recognized in change in fair value of contingent milestone liabilities, in the condensed consolidated statements of operations and comprehensive loss. The fair value of the Prolaio Contingent Consideration was $3.8 million as of December 31, 2025. Upon the Prolaio amendment, on May 1, 2026, the Prolaio Contingent Consideration was settled and the new contingent milestone liabilities were recognized at an initial fair value of $13.7 million. The fair value of the contingent milestone liabilities was $47.3 million as of June 30, 2026. We recognized a $43.5 million increase in the fair value of contingent milestone liabilities, which is presented within change in fair value of contingent milestone liabilities in the condensed consolidated statements of operations, for both the three and six months ended June 30, 2026. No change in fair value was recorded in the three and six months ended June 30, 2025. None of the Prolaio milestones, original or amended, had been achieved by June 30, 2026, and no milestone payments have been made.

Acquisition of RSF

On March 11, 2024, we entered into an Agreement and Plan of Merger with RSF (the "RSF Merger Agreement"), pursuant to which, on June 6, 2024, we acquired 100% of outstanding capital stock of RSF. RSF holds a patent license and know-how agreement with Mayo, originally effective December 6, 2019, as amended, granting an exclusive license to Mayo's proprietary methods and materials for treating calcific aortic valve stenosis. RSF also holds four exclusive option agreements with Mayo covering additional small-molecule programs and indications. The acquisition included Ataciguat (HMR1766), in addition to RSF's other existing agreements such as supply and license agreements with Sanofi and its affiliates. The closing was conditioned upon our completion of a Series A redeemable convertible preferred stock financing with gross proceeds of at least $150.0 million, which condition was satisfied on June 6, 2024.

As initial consideration, the acquisition involved upfront cash payments totaling $3.5 million, the settlement of RSF's outstanding indebtedness of $10.6 million on June 6, 2024, and the payment of certain transaction costs of $0.7 million incurred by RSF. We accounted for the transaction as the acquisition of a VIE that is not a business. The net assets acquired consisted primarily of the IPR&D asset, cash and cash equivalents in an amount of $0.2 million, and assumed accounts payable for an amount of $1.3 million. Accordingly, the consideration allocated to the IPR&D asset amounted to $15.9 million. The acquired licensed technology was determined to be an IPR&D asset that did not have alternative future use as of the acquisition date, and the full amount was recognized as research and development expense in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2024.

In addition to the initial consideration, and subject to the conditions set forth in the RSF Merger Agreement, the former stockholders of RSF are entitled to milestone payments of up to $26.5 million in development and regulatory milestones, and up to $249.5 million in sales milestones, in each case to be allocated among such former stockholders on a pro rata basis in accordance with their respective ownership interests in RSF immediately prior to the acquisition. We are additionally obligated to pay to the former stockholders of RSF low-single digit tiered royalties on annual net sales of any pharmaceutical product containing Ataciguat. The royalty term ends on a product-by-product and country-by-country basis on the earliest of (i) our cessation of development or commercialization of the applicable product, (ii) the expiration of the last-to-expire valid

patent claim covering the product in such country, or (iii) the first commercial sale of a generic product in the same indication in such country.

During the year ended December 31, 2025, we achieved the first development milestone associated with Ataciguat upon dosing of the first patient in the Phase 3 clinical trial. This milestone triggered a payment obligation of $3.0 million. As a result, we recognized $3.0 million in research and development expenses for the year ended December 31, 2025 in our consolidated statement of operations and comprehensive loss. Of the total milestone amount, $1.5 million was settled in cash and the remaining $1.5 million was accrued for in our consolidated balance sheet as of December 31, 2025 and as of June 30, 2026 within accrued and other current liabilities. None of the other RSF milestones had been achieved nor were deemed probable and estimable as of June 30, 2026, and no other milestone payments have been made.

License and collaboration agreements

Below is a summary of the key terms for certain of our license and collaboration agreements. For a more detailed description of these agreements, see Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

License agreements with BMS Co.

In November 2024, we entered into a License Agreement with MyoKardia, a wholly owned subsidiary of BMS Co., related to Danicamtiv and other compounds (the "Dani Agreement"), and a separate License Agreement with BMS Co. related to KAR-141 (formerly known as BMS-986141) ("Par4") and other compounds (the "Par4 Agreement").

Dani agreement

Under the Dani Agreement, we received an exclusive, sublicensable (subject to certain conditions and restrictions), royalty-bearing license under certain MyoKardia patents and know-how to develop, manufacture, and commercialize Danicamtiv (formerly known as MYK-491) and certain related compounds thereto (the "Dani Lead Compounds"), certain back-up compounds and certain related compounds thereto (such compounds, collectively with the Dani Lead Compounds, the "Dani Licensed Compounds"), and pharmaceutical products containing the Dani Licensed Lead Compounds (the "Dani Lead Compound Licensed Products") and pharmaceutical products containing the Dani Back-Up Compounds (such products, collectively with the Dani Lead Compound Licensed Products, the "Dani Licensed Products") for all human uses worldwide. As partial consideration for the rights granted to us under the Dani Agreement, we entered into a Subscription Agreement with MyoKardia pursuant to which we issued 1,251,107 shares of Series A redeemable convertible preferred stock to MyoKardia. As additional consideration for the licenses granted under the Dani Agreement, we are required to pay MyoKardia: (i) tiered royalties at a rate based on aggregate annual net sales by us, our affiliates and sublicensees of each Dani Licensed Product containing the same Dani Licensed Compound; (ii) a low double-digit percentage of any sublicensing revenue received by us, if we sublicense rights under MyoKardia patents or know-how for the development, manufacture or commercialization of any Dani Lead Compound or Dani Lead Compound Licensed Product to a third party within a certain number of months from the effective date, or November 2026; (iii) up to $42.5 million in the aggregate in development and regulatory milestone payments across all Dani Licensed Products and (iv) up to $265.0 million in sales milestone payments for each of the first two Dani Licensed Products to achieve the applicable sales milestones. Our tiered royalties range from a subteen to high teen percentage of annual net sales of the Dani Licensed Products, subject to potential reductions following the expiration of valid patent claims, due to competition from generic products, for certain third party license fees, and in the event of a limit on the maximum price as a result of the Inflation Reduction Act of 2022 (the "Inflation Reduction Act"), subject to a customary reduction floor and potential carry-forward.

Par4 agreement

Under the Par4 Agreement, we received an exclusive, sublicensable (subject to certain conditions and restrictions), royalty-bearing license under certain BMS Co. patents and know-how to develop, manufacture, and commercialize Par4 and certain related compounds thereto (the "Par4 Lead Compounds"), certain back-up compounds and certain related compounds thereto (such compounds, collectively with the Par4 Lead Compounds, the "Par4 Licensed Compounds"), pharmaceutical products containing the Par4 Lead Compounds (the "Par4 Lead Compound Licensed Products") and pharmaceutical products containing the Par4 Back-Up Compounds (such products, collectively with the Par4 Lead Compound Licensed Products, the "Par4 Licensed Products") for all human uses worldwide. As partial consideration for the rights granted under the Par4 Agreement, we entered into a Subscription Agreement with BMS Co. pursuant to which we issued 293,469 shares of Series A redeemable convertible preferred stock. As additional consideration for the licenses granted under the Par4

Agreement, we are required to pay BMS Co.: (i) tiered royalties at a rate based on aggregate annual net sales by us, our affiliates and sublicensees of each Par4 Licensed Product containing the same Par4 Licensed Compound; (ii) a low double-digit percentage of any sublicensing revenue received by us, if we sublicense rights under BMS Co. patents or know-how for the development, manufacture or commercialization of any Par4 Lead Compound or Par4 Lead Compound Licensed Product to a third party within a certain number of months from the effective date, or November 2026; (iii) up to $10.0 million in the aggregate in development and regulatory milestone payments across all Par4 Licensed Products and (iv) up to $265.0 million in sales milestone payments for each of the first two Par4 Licensed Products to achieve the applicable sales milestones. Our tiered royalties range from a subteen to high teen percentage of annual net sales of the Par4 Licensed Products, subject to potential reductions following the expiration of valid patent claims, due to competition from generic products, for certain third party license fees, and in the event of a limit on the maximum price as a result of the Inflation Reduction Act, subject to a customary reduction floor and potential carry-forward. Additionally, certain BMS Co. patents and know-how are sublicensed by BMS Co. pursuant to an upstream license agreement with a university and we are responsible for reimbursing BMS Co. for certain milestone payments and other amounts payable under such upstream agreement that arise from our development, manufacturing or commercialization activities under the Par4 Agreement. The milestone reimbursement obligations include up to (i) $12.5 million in the aggregate in development and regulatory milestone payments per certain Par4 Licensed Products and (ii) $13.625 million in the aggregate in development and regulatory milestone payments per certain other Par4 Licensed Products.

In connection with the Dani and Par4 license agreements, we issued an aggregate of 1,544,576 shares of Series A redeemable convertible preferred stock to MyoKardia and BMS Co., including 1,251,107 shares of Series A redeemable convertible preferred stock under the Dani Agreement, and 293,469 shares of Series A redeemable convertible preferred stock under Par4 Agreement, at the estimated fair value of $19.10 per share as of issuance date, with a total estimated fair value of $29.5 million. We determined that the Dani and Par4 licenses represent acquired IPR&D assets that did not have alternative future use as of the acquisition date, and, accordingly, an amount of $29.5 million was recognized as research and development expense in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2024. As of June 30, 2026, none of the Dani milestones or Par4 milestones had been achieved nor were deemed probable or estimable, and no milestone payments have been made.

License agreement with Ionis

On June 7, 2024, we entered into a License Agreement (the "Ionis License Agreement") with Ionis, pursuant to which we were granted an exclusive, worldwide, sublicensable (subject to certain conditions and restrictions), royalty-bearing license under certain Ionis intellectual property to develop and commercialize Tonlamarsen (formerly ION904) and products containing Tonlamarsen (the "Licensed Ionis Products") in the field of prophylactic or therapeutic use in humans (the "Ionis Licensed Field"). We also received a non-exclusive, worldwide, sublicensable (subject to certain conditions and restrictions), royalty-bearing license under certain Ionis intellectual property to manufacture Tonlamarsen and Licensed Ionis Products in the Ionis Licensed Field. Until the third anniversary of the effective date of the Ionis License Agreement, or June 2027, neither party may develop or commercialize, or assist or grant a third party rights to develop or commercialize certain ASOs designed to bind to the RNA encoded by the human angiotensinogen gene, subject to certain conditions and exceptions. As initial consideration for the Ionis License Agreement, we made an upfront payment of $20.0 million to Ionis. We determined that the licenses represent an acquired IPR&D asset that did not have alternative future use as of the acquisition date, and, accordingly, the total amount of the upfront payment of $20.0 million was recognized as research and development expense in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2024.

As additional consideration for the licenses and rights granted to us by Ionis, we are required to pay Ionis: (i) milestone payments in the event of successful achievement of specified development and sales milestones of up to an aggregate of $375.0 million (up to $35.0 million in development and regulatory milestone payments and up to $340.0 million in sales milestone payments); (ii) tiered royalties on net sales of Ionis Licensed Products by us, our affiliates and sublicensees with a rate based on net sales per calendar year, ranging from a subteen percentage to high teen percentage. The royalties are subject to potential reductions under certain scenarios. In the event that we undergo a change of control prior to receiving regulatory approval by the FDA and are acquired by one of certain top biopharmaceutical or pharmaceutical companies, if the acquisition price exceeds a certain dollar value, we will be required to pay Ionis a one-time change of control payment based on the acquisition price, ranging in the low tens of millions of dollars. The payment will accrue interest at a subteen percentage per annum, compounded annually, from the date of the Ionis License Agreement through the date such payment is made. As of June 30, 2026, none of the Ionis milestones had been achieved nor were deemed probable and estimable, and no milestone payments have been made.

License agreement with Sanofi

On June 2, 2021, RSF entered into a license agreement with Sanofi, as subsequently amended on March 18, 2022, January 9, 2023, and November 7, 2025 (collectively, the "Sanofi License"), under which RSF received a worldwide, exclusive, sublicensable (subject to certain conditions and restrictions), royalty-bearing license under certain Sanofi know-how to exploit Ataciguat (also known as HMR1766) and pharmaceutical products containing Ataciguat ("Ataciguat Products") for all human and mammalian therapeutic, prophylactic and diagnostic uses (the "Sanofi License Field"). RSF became our wholly owned subsidiary in June 2024. If we succeed in developing and commercializing Ataciguat Products, we will be obligated to pay Sanofi up to an aggregate of $14.8 million in potential commercial milestone payments. As of June 30, 2026, none of the Sanofi milestones had been achieved nor were deemed probable and estimable, and no milestone payments have been made. We are also obligated to pay Sanofi tiered royalties ranging from low-single digit to mid-single digit percentages on worldwide annual net sales of Ataciguat Products by us or our affiliates and sublicensees.

Patent license and know-how agreement with Mayo

On December 6, 2019, RSF entered into a license agreement with Mayo, as amended on May 20, 2021, August 23, 2023, March 10, 2024, June 6, 2024, and December 22, 2025 (collectively, the "Mayo License"), under which RSF received (i) a worldwide exclusive license with the right to sublicense (through multiple tiers) under certain Mayo patent rights, (ii) a nonexclusive license with the right to sublicense (through multiple tiers) to use certain know-how and materials, and (iii) a nonexclusive worldwide license, with the right to sublicense (through multiple tiers) in connection with a sublicense of the Mayo patent rights or know-how, subject to approval from Mayo, to use certain Mayo data, in each case in (i) through (iii), to develop, make, have made, use, offer for sale, sell, and import certain licensed products, including Ataciguat, for the prevention, diagnosis, and/or treatment of any and all human diseases and conditions. We are also obligated to pay Mayo up to $0.3 million in development and regulatory milestone payments and up to $1.3 million in commercial milestone payments for each licensed product to achieve the corresponding milestone events. As of June 30, 2026, none of the Mayo milestones had been achieved nor were deemed probable and estimable, and no milestone payments have been made.

We are also obligated to pay Mayo royalties ranging from a mid-single digit to subteen percentage of worldwide annual net sales by us, our affiliates and sublicensees of licensed products. In the event that we are required to pay a non-affiliate third party certain consideration for a license under intellectual property rights owned or controlled by such non-affiliate third party that are required for the manufacture, use or sale of the licensed products, we can deduct a certain amount of such consideration from the royalty payments due to Mayo under the Mayo Agreement, subject to a customary reduction floor.

Critical accounting policies and estimates

Our management's discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements and accompanying notes. We base our estimates and assumptions on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and judgments on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

See Note 2, "Summary of Significant Accounting Policies" to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, for information about our significant accounting policies and estimates used in the preparation of our condensed consolidated financial statements. There have been no significant and material changes in our critical accounting policies during the three and six months ended June 30, 2026, as compared to those disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the year ended December 31, 2025 included in the final prospectus dated June 17, 2026 filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended.

Emerging growth company and smaller reporting company status

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the "JOBS Act"), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We may take advantage of these exemptions until we are no longer an emerging growth company. Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and

as a result of this election, our consolidated financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the time that we are no longer an "emerging growth company."

We will remain an emerging growth company until the earlier of the last day of the fiscal year (a) following the fifth anniversary of the completion of the IPO, (b) in which we have total annual gross revenue 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, among other things, the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, or (d) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We have elected to take advantage of certain of the reduced disclosure obligations in this Quarterly Report on Form 10-Q and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than what you might receive from other public reporting companies in which you hold equity interests. In addition, the JOBS Act provides that an "emerging growth company" can take advantage of an extended transition period for complying with new or revised accounting standards. We have elected not to "opt out" of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we can adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that we either (1) irrevocably elect to "opt out" of such extended transition period or (2) no longer qualify as an "emerging growth company."

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 may take advantage of certain of the scaled disclosures available to smaller reporting companies until for so long as either (i) our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter or (ii) our annual revenues are less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Recent accounting pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, "Summary of Significant Accounting Policies" to our condensed consolidated financial statements included elsewhere in 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.