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

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

Certain statements contained in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words and phrases "designed to," "may," "might," "can," "will," "to be," "could," "would," "should," "expect," "intend," "plan," "objective," "anticipate," "believe," "estimate," "predict," "project," "potential," "likely," "continue," "ongoing" or similar expressions, or the negative of such words, are intended to identify "forward-looking statements." We have based these forward-looking statements on our current expectations and projections about future events. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include those below in this Quarterly Report under the caption "Risk Factors," and in our other filings with the Securities and Exchange Commission, or SEC. Statements made herein are as of the date of the filing of this Form 10-Q with the SEC and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim, any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes for the year ended December 31, 2025, which are included in our Annual Report on Form 10-K filed with the SEC on March 30, 2026.

Overview

We are a clinical-stage biotechnology company focused on improving outcomes for cancer patients through multi-node inhibition of critical oncogenic pathways. On February 17, 2026, we completed the acquisition of Faeth Therapeutics, a clinical-stage biotechnology company developing multi-node therapies targeting tumor metabolism and signaling (the "Acquisition"), and received $200 million in gross proceeds from the 2026 Private Placement from a broad syndicate of institutional investors. Effective June 15, 2026, we changed our corporate name from Sensei Biotherapeutics, Inc. to Faeth Therapeutics, Inc. The acquisition brought Faeth's lead asset, PIKTOR, a proprietary investigational all-oral combination of serabelisib and sapanisertib that inhibits multiple nodes of the PI3K/AKT/mTOR pathway, into our pipeline. For additional information regarding the terms of the acquisition and the concurrent financing, see Note 3 to the condensed consolidated financial statements.

Following the Acquisition, our lead program is PIKTOR, an oral multi-node inhibitor of the PI3K/AKT/mTOR pathway in development for endometrial and breast cancer. The PI3K/AKT/mTOR pathway is dysregulated in up to 50% of all solid tumors, making it one of the most prevalent therapeutic targets in oncology. Our core thesis is that simultaneously suppressing multiple pathway nodes can produce deeper, more durable tumor suppression than approved therapies that target only a single node. PIKTOR is currently being evaluated in an ongoing Phase 2 trial in second-line advanced endometrial cancer (Study FTH-PIK-201), with topline data anticipated by year-end. Additionally, in April 2026 the first patient was dosed in our Phase 1b/2 trial in HR+/HER2- advanced breast cancer (Study FTH-PIK-101), from which we expect to report interim data in 2027. We believe the $200 million in gross financing proceeds, together with our existing cash, cash equivalents and marketable securities, will be sufficient to fund operations through these key clinical milestones.

Prior to the Acquisition, we were primarily focused on the development of solnerstotug (formerly SNS-101), our conditionally active monoclonal antibody targeting the immune checkpoint VISTA. We are completing the remaining portion of the solnerstotug Phase 1/2 trial with patients currently on study.

We have incurred significant operating losses since our inception and expect to continue to incur losses for the foreseeable future. Our net loss was $186.2 million and $11.8 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $469.4 million and cash, cash equivalents and marketable securities of $186.4 million, which includes $183.1 million in net proceeds received in the 2026 Private Placement. The increase in our net loss for the six months ended June 30, 2026 compared to the same prior year period was primarily attributable to $133.0 million of acquired in-process research and development expense recognized in connection with the Acquisition, as well as increased research and development and general and administrative expenses resulting from the integration of Faeth's operations, including stock-based compensation expense related to the accelerated vesting of Faeth employee stock options and related tax gross-up payments.

Components of Our Results of Operations

Operating Expenses

Research and Development Expense

Our research and development expense consists of expenses incurred in connection with the discovery and development of our product candidates. These expenses include:

We expense all research and development costs in the periods in which they are incurred. Costs for certain research and development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and third-party service providers. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense when the goods have been delivered or the services have been performed, or when it is no longer expected that the goods will be delivered or the services rendered.

Our direct external research and development expenses consist primarily of third-party costs, such as fees paid to CROs, CMOs, research/testing laboratories and outside consultants in connection with our preclinical development, process development, manufacturing and clinical development activities. We do not allocate these costs to specific product candidates because many of them are deployed across several of our development programs and, as such, are not separately classified. All other external research and development costs, including personnel costs, are not allocated to specific product candidates as they support multiple development programs. We have historically used internal resources primarily to conduct research and manage our preclinical development, process development, manufacturing and clinical development activities. These employees have worked across multiple development programs and, therefore, we have not historically tracked their costs by program and, as such, are not separately classified. Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of, or when, if ever, material net cash inflows may commence from any of our product candidates. This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of clinical trials, which vary significantly over the life of a project as a result of many factors, including:

Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals. We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or other regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development. Product commercialization will take several years and significant additional development costs.

General and Administrative Expense

General and administrative expenses consist principally of salaries and related costs for personnel in executive, administrative, finance and legal functions, including stock-based compensation, travel and recruiting expenses. Other general and administrative expenses include facility related costs, patent filing and prosecution costs and professional fees for legal, auditing and tax services, and insurance costs.

Acquired In-Process Research and Development Expense

Acquired in-process research and development expense represents the fair value of in-process research and development assets obtained in connection with asset acquisitions where the acquired IPR&D has no alternative future use as of the acquisition date. In accordance with ASC 805, such amounts are expensed at the time of acquisition rather than capitalized. We expect to recognize acquired IPR&D expense in periods in which we consummate acquisitions of development-stage assets. The amount and timing of such charges, if any, will depend on the nature, size and frequency of future acquisition activity.

Other Income (Expense)

Our other income (expense) consists of accretion on short-term investments, interest income (expense), gain or loss on fixed asset disposal, and changes in fair value of warrant liabilities.

Income Taxes

Since our inception, we have not recorded any income tax benefits for the net losses we have incurred or for the research and development tax credits earned in each year, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credit carryforwards will not be realized.

Results of Operations

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

The following sets forth our results of operations for the three months ended June 30, 2026 and 2025:

Research and Development Expenses

Research and development expenses were $9.2 million for the three months ended June 30, 2026, compared to $2.5 million for the three months ended June 30, 2025. The increase of $6.6 million was primarily driven by development costs for PIKTOR which contributed approximately $5.0 million of research and development costs for the quarter, including preclinical, clinical trial, and chemistry, manufacturing and controls (or "CMC") related expenses, together with an increase of $2.3 million related personnel costs, including stock-based compensation and incentives. Legacy Sensei programs research and development spend was $0.7 million lower primarily due to lower expense associated with clinical trials.

General and Administrative Expenses

General and administrative expenses were $9.2 million for the three months ended June 30, 2026, compared to $2.7 million for the three months ended June 30, 2025. The increase of $6.5 million was primarily driven by $3.6 million of higher personnel costs, including stock-based compensation and incentives, $1.6 million of increased external administrative fees, $1.1 million of higher consulting expense and $0.2 million of higher licensing fees.

Other Income

Other income was $2.4 million for the three months ended June 30, 2026, compared to other income of $0.3 million for the three months ended June 30, 2025. The increase of $2.1 million was primarily related to an increase in interest income on securities.

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

The following sets forth our results of operations for the six months ended June 30, 2026 and 2025:

Research and Development Expenses

Research and development expenses were $27.1 million for the six months ended June 30, 2026, compared to $6.3 million for the six months ended June 30, 2025. The increase of $20.9 million was primarily driven by the inclusion of development costs of PIKTOR following the February 2026 acquisition, contributing $6.1 million of research and development costs including preclinical, clinical trial, and CMC related expenses, significant non-recurring costs associated with the Acquisition including $4.8 million of non-cash stock-based compensation expense and $9.1 million of non-recurring tax gross-up payments related to the accelerated vesting of Faeth options, along with $3.3 million of higher personnel costs, including stock-based compensation and incentives, partially offset by a $2.4 million decrease in legacy Sensei programs research and development expenses.

We expect research and development expenses in future periods to be lower than those incurred during the six months ended June 30, 2026, which included significant non-recurring costs associated with the Acquisition, including stock-based compensation expense related to the accelerated vesting of Faeth employee stock options and tax gross-up payments. However, we expect our ongoing research and development expenses to increase significantly as we advance PIKTOR through our ongoing Phase 2 trial in advanced endometrial cancer and our recently initiated Phase 1b/2 trial in HR+/HER2- advanced breast cancer, and as we expand preclinical and CMC activities for our broader pipeline.

General and Administrative Expenses

General and administrative expenses were $28.9 million for the six months ended June 30, 2026, compared to $6.2 million for the six months ended June 30, 2025. The increase of $22.7 million was primarily driven by acquisition-related charges consisting of $6.2 million of non-cash stock-based compensation expense and $6.5 million of non-recurring tax gross-up payments related to the accelerated vesting of Faeth options, $2.5 million of transaction costs, $2.3 million of Faeth operating costs, and $4.5 million of higher personnel costs, including stock-based compensation and incentives, along with a $0.7 million increase primarily due to integration-related professional fees.

We expect our general and administrative expenses in future periods to be lower than those incurred during the six months ended June 30, 2026, which included significant non-recurring costs associated with the Acquisition, including stock-based compensation expense related to the accelerated vesting of Faeth employee stock options and transaction costs. However, we expect our ongoing general and administrative expenses to remain significantly higher than our pre-Acquisition levels as a result of the integration of Faeth Therapeutics' operations, including personnel costs associated with the expanded workforce and the support of our broader product pipeline, as well as additional costs associated with operating as a larger public company, including consulting, legal, tax-related services, accounting, investor relations, and insurance premiums.

Acquired In-Process Research and Development Expense

Acquired in-process research and development expense was $133.0 million for the six months ended June 30, 2026, with no comparable expense in the prior year period. The charge was recognized in connection with the Acquisition in February 2026 and represents the fair value of acquired IPR&D assets that had no alternative future use as of the acquisition date. See Note 3 to our unaudited condensed consolidated financial statement included elsewhere in this Quarterly Report for additional information regarding the acquisition.

Other Income

Other income was $2.8 million for the six months ended June 30, 2026 compared to $0.7 million for the six months ended June 30, 2025. The $2.1 million increase was primarily related to an increase in interest income on securities.

Liquidity and Capital Resources

Sources of Liquidity

We have not generated any product revenue and have incurred net losses and negative cash flows from our operations. As of June 30, 2026, we had cash, cash equivalents and marketable securities of $186.4 million. We have financed our operations through sales of our common stock, redeemable convertible preferred stock and convertible debt. Through the date of this Quarterly Report, we have raised an aggregate of $123.4 million of gross proceeds from private placements of our equity and convertible debt securities and net proceeds of $138.5 million from our IPO in February 2021 and an additional $183.1 million in net proceeds received in the 2026 Private Placement. Our net loss was $186.2 million and $11.8 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $469.4 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures and general and administrative expenditures.

We expect our cash requirements to increase as we advance PIKTOR through multiple clinical trials following the Acquisition, including our ongoing Phase 2 trial in advanced endometrial cancer and our recently initiated Phase 1b/2 trial in HR+/HER2- advanced breast cancer, and we believe our existing cash, cash equivalents and marketable securities of $186.4 million are sufficient to fund operations through topline data readouts from both studies.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods below (in thousands):

Operating Activities

During the six months ended June 30, 2026, net cash used in operating activities was $26.4 million, primarily resulting from our $186.2 million net loss partially offset by a $9.8 million increase in our operating assets and liabilities and increases in non-cash charges of $150.0 million, primarily related to $133.0 million of acquired in-process research and development from the Acquisition, $17.4 million of stock compensation expense and $0.7 million of non-cash lease expense partially offset by $1.1 million of accretion on marketable securities. The change in operating assets and liabilities was primarily related to a $10.3 million decrease in prepaid expenses $0.2 million increase in accounts payable and accrued liabilities and a $0.1 million increase in other assets offset by a $0.8 million decrease in operating lease liabilities.

During the six months ended June 30, 2025, net cash used in operating activities was $13.0 million, primarily resulting from our $11.8 million net loss and a $2.3 million decrease in our operating assets and liabilities partially offset by increases in non-cash charges of $1.1 million, primarily related to $0.8 million of non-cash lease expense and $0.7 million of stock compensation expense, partially offset by $0.4 million of accretion on marketable securities.

Investing Activities

During the six months ended June 30, 2026, net cash used in investing activities was $139.5 million, primarily due to $158.6 million in purchases of short-term investments, partially offset by $12.6 million in maturities of short-term investments and $6.5 million in cash assumed from the Acquisition.

During the six months ended June 30, 2025, net cash provided by investing activities was $15.9 million, primarily due to $24.5 million in maturities of short-term investments and $0.2 million of proceeds from the sale of property and equipment, partially offset by $8.8 million in purchases of short-term investments.

Financing Activities

During the six months ended June 30, 2026, net cash provided by financing activities was $184.1 million, primarily consisting of $200.0 million proceeds from the issuance of Series B Preferred Stock, $1.1 million from the exercise of options into common stock, partially offset by $16.9 million of issuance costs from the private placement issuance of Series B Preferred Stock and $0.1 million of principal payments under our financing leases.

During the six months ended June 30, 2025, net cash used in financing activities was $0.4 million, primarily consisting of $0.5 million of principal payments under our financing leases, partially offset by $0.1 million of proceeds from the sale of financing lease assets.

Material Cash Requirements

Our material cash requirements will have an impact on our future liquidity. Our material cash requirements represent material expected or contractually committed future payment obligations.

Operating Leases

We have operating lease arrangements for our corporate offices and lab facilities. As of June 30, 2026, we had operating lease payment obligations of $0.6 million, with $0.5 million payable for the remainder of 2026. See Note 7 in our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional information.

In the biopharmaceutical industry, it can take a significant amount of time and capital resources to successfully complete all stages of research and development and commercialize a product candidate. The ultimate length of time and spend required cannot be accurately estimated as it varies substantially according to the type, complexity, novelty and intended use of a product candidate. Please see the "Funding Requirements" section below for further details.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, initiate clinical trials of, and potentially seek marketing approval for, our product candidates. In addition, we expect to continue to incur significant costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. The timing and amount of our operating expenditures will depend largely on:

We expect our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements through topline data readouts from both our ongoing Phase 2 trial of PIKTOR in advanced endometrial cancer (Study FTH-PIK-201) and our recently initiated Phase 1b/2 trial of PIKTOR in HR+/HER2- advanced breast cancer (Study FTH-PIK-101). We have based this estimate on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Our future capital requirements will depend on many factors, including:

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. In addition, debt financing would result in fixed payment obligations.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our 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 additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Critical Accounting Policies and Significant Judgements and Estimates

This Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our financial statements, which are prepared in accordance with US GAAP. The preparation of our financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, costs and expenses. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates.

We define our critical accounting policies as those accounting principles that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. During the six months ended June 30, 2026, we acquired in-process research and development intangible assets in connection with the Faeth Therapeutics merger, which represents a new critical accounting policy not previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with

the SEC on March 30, 2026. Except for this addition, there were no other significant changes to our critical accounting policies which are included in our Annual Report on Form 10-K.

Recent Accounting Pronouncements

See Note 2 in our condensed consolidated financial statements included elsewhere in this Form 10-Q for a description of recent accounting pronouncements applicable to our financial statements. Other than as disclosed in our financial statements, we do not expect that any recently issued accounting standards will have a material impact on our financial statements or will otherwise apply to our operations.

Emerging Growth Company and Smaller Reporting Company Status

We qualify as an Emerging Growth Company, or EGC, as defined in the JOBS Act. As an EGC, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies, including reduced disclosure about our executive compensation arrangements, exemption from the requirements to hold non-binding advisory votes on executive compensation and golden parachute payments and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

We may take advantage of these exemptions until the last day of the fiscal year following the fifth anniversary of our initial public offering or such earlier time that we are no longer an emerging growth company. We would cease to be an EGC earlier if we have more than $1.235 billion in annual revenue, we have more than $700.0 million in market value of our stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or we issue more than $1.0 billion of non-convertible debt securities over a three-year period. For so long as we remain an EGC, we are permitted, and intend, to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not EGCs. We may choose to take advantage of some, but not all, of the available exemptions.

In addition, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. 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 will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to "opt out" of such extended transition period or (ii) no longer qualify as an EGC. Therefore, the reported results of operations contained in our condensed consolidated financial statements may not be directly comparable to those of other public companies.

We are also a "smaller reporting company," meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.

If we are a smaller reporting company at the time we cease to be an EGC, 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 EGCs, smaller reporting companies have reduced disclosure obligations regarding executive compensation.