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 of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our annual audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the Securities and Exchange Commission ("SEC") on March 11, 2026. This discussion and analysis contains forward-looking statements that involve significant risks and uncertainties. Our actual results, performance or experience could differ materially from what is indicated by any forward-looking statement due to various important factors, risks and uncertainties, including, but not limited to, those set forth under "Risk Factors" included elsewhere in this Quarterly Report on Form 10-Q.

Overview

We are a clinical-stage biopharmaceutical company focused on the development and commercialization of certain proprietary product candidates to treat patients suffering from central nervous system ("CNS") diseases.

Our lead product candidate, roluperidone, is in development for the treatment of negative symptoms in patients diagnosed with schizophrenia. In August 2022, we submitted a New Drug Application ("NDA") with the U.S. Food and Drug Administration ("FDA") for roluperidone for the treatment of negative symptoms in schizophrenia. On February 26, 2024, the FDA issued a Complete Response Letter ("CRL") regarding our NDA for roluperidone. Subsequent to the CRL, we have had multiple interactions with the FDA to confirm the design of an additional Phase 3 confirmatory clinical trial to address the deficiencies cited in the CRL and resubmit the NDA.

In connection with our interactions with the FDA subsequent to the CRL, the FDA stated that it would consider a resubmission of the NDA that included a double-blind, placebo- or active-controlled trial of roluperidone with a duration of at least 52 weeks with the efficacy primary endpoint at week 12. The FDA also advised that, to support a monotherapy indication, it would be necessary to assess relapses on an observational basis for at least 52 weeks, in patients treated in monotherapy with roluperidone or antipsychotics. We informed the FDA that best efforts will be made to secure 25-30% of patients from the United States, subject to competitive recruitment.

We submitted the protocol for the new Phase 3 confirmatory trial, which we refer to as the C19 trial, to the FDA on December 3, 2025. Consistent with the previous Phase 2b (C03) and Phase 3 (C07) clinical trials of roluperidone, the C19 trial will include patients diagnosed with schizophrenia who present with stable impairing negative symptoms and stable positive symptoms for the six months prior to entering the trial. The trial is designed to enroll 380 patients, randomized on a 1:1 basis to receive either placebo or a double-blinded single daily 64 mg dose of roluperidone.

The primary efficacy endpoint of the C19 trial is expected to be the change from baseline in the PANSS Marder negative symptoms factor score ("NSFS") at 12 weeks of treatment with roluperidone compared to placebo. Following the initial 12-week treatment period, patients are expected to enter a 52-week relapse assessment phase, during which patients will crossover to receive either a daily 64 mg dose of roluperidone or antipsychotics. On March 31, 2026, we announced that the first patient had been screened in the C19 trial. We currently expect topline efficacy results in the second half of 2027 and relapse assessment data in the second half of 2028.

In addition, we previously co-developed seltorexant with Janssen Pharmaceutica NV ("Janssen"), a subsidiary of Johnson & Johnson, for the treatment of insomnia disorder and adjunctive treatment of Major Depressive Disorder ("MDD"). As a result of our collaboration with Janssen, we were entitled to collect royalties in the mid-single digits on potential future worldwide sales of seltorexant in certain indications, with no further financial obligations to Janssen. In January 2021, we sold our rights to these potential royalties to Royalty Pharma plc ("Royalty Pharma") for a $60 million cash payment and up to an additional $95 million in potential future milestone payments, subject to completion of Phase 3 trials by Janssen and regulatory approvals. To our knowledge, Janssen is currently conducting two Phase 3 trials with seltorexant.

We have not received any regulatory approvals to commercialize any of our product candidates, and we have not generated any revenue from the sales or license of our product candidates. We routinely evaluate the status of our drug development programs as well as potential strategic options. We have incurred significant operating losses since inception and expect to continue to incur net losses and negative cash flows from operating activities for the foreseeable future. As of June 30, 2026 and December 31, 2025, we had an accumulated deficit of $796.7 million and $688.8 million, respectively. For the six months ended June 30, 2026 and 2025, we recorded net loss of $107.9 million and $7.0 million, respectively. We expect our clinical and administrative costs will increase as we begin to incur clinical trial costs and hire additional support staff to support the Phase 3 trial of roluperidone.

Macroeconomic Considerations

Results of our operations have varied and may vary in the future based on the impact of changes in the domestic or global economy. Negative conditions in the general economy both in the United States and abroad, including conditions resulting from changes in inflation and fluctuations in interest rates, financial and credit market fluctuations, international trade relations and tariffs, pandemics, political turmoil, natural catastrophes and warfare in the United States or elsewhere, could negatively affect our business. It is not possible at this time to estimate the long-term impact that these and related events could have on our business, as the impact will depend on future developments, which are highly uncertain and cannot be predicted.

Financial Overview

Revenue

None of our product candidates have been approved for commercialization and we have not received any revenue in connection with the sale or license of our product candidates.

Research and Development Expenses

Research and development costs are expensed as they are incurred and consist principally of costs incurred in connection with the development of our product candidates including: fees paid to consultants and clinical research organizations ("CROs"), investigator grants, patient screening, laboratory work, database management, material management, statistical analysis, license fees, regulatory compliance, and costs related to salaries, benefits, bonuses and stock-based compensation granted to employees in research and development functions.

Completion dates and costs can vary significantly by product candidate and are difficult to predict. We anticipate making determinations as to which programs to pursue and the level of funding to direct to each program on an ongoing basis in response to the scientific and clinical success or failure of each product candidate, the estimated costs to continue the development program relative to our available resources, as well as an ongoing assessment of each product candidate's commercial potential. We will need to raise additional capital or may seek additional product collaborations in the future to complete the development and commercialization of our product candidates.

General and Administrative Expenses

General and administrative costs are expensed as they are incurred and consist principally of costs for facility and information systems, professional fees for auditing, consulting and legal services and costs related to salaries, benefits, bonuses and stock-based compensation granted to employees in administrative functions. General and administrative costs also include costs for maintaining a publicly listed company including increased audit and legal fees, compliance with securities laws, corporate governance and investor relations.

Foreign Exchange Gains (Losses)

Foreign exchange gains (losses) are comprised primarily of gains and (losses) on foreign currency transactions primarily related to research and development expenses. We incur certain expenses, primarily in Euros, and record these expenses in United States Dollars at the time the liability is incurred. Changes in the applicable foreign currency rate between the date that an expense is recorded and the payment date is recorded as a foreign currency gain or (loss).

Investment Income

Investment income consists of income earned on our cash equivalents and marketable securities.

Changes in fair value of the warrant liability

Changes in fair value of the warrant liability consist of the gain (loss) associated with the adjustment to the carrying amount of the warrant liability.

Results of Operations

Comparison of Three Months Ended June 30, 2026 versus June 30, 2025

Research and Development Expenses

Research and development expenses were $7.2 million and $1.3 million for the three months ended June 30, 2026 and 2025, respectively, an increase of approximately $5.9 million. The increase in research and development expenses was primarily due to expenses related to the C19 trial as well as higher compensation costs. Non-cash stock compensation costs included in research and development expenses were $1.0 million and $0.1 million for the three months ended June 30, 2026 and 2025, respectively.

General and Administrative Expenses

General and administrative expenses were $3.5 million and $2.1 million for the three months ended June 30, 2026 and 2025, respectively, an increase of approximately $1.4 million. The increase in general and administrative expenses was primarily due to higher professional service fees and compensation costs. Non-cash stock compensation costs included in general and administrative expenses were $1.3 million and $0.2 million for the three months ended June 30, 2026 and 2025, respectively.

Foreign Exchange Losses

Foreign exchange losses were $14 thousand and $21 thousand for the three months ended June 30, 2026 and 2025, respectively, a decrease of $7 thousand, primarily due to currency movements.

Investment Income

Investment income was $0.6 million and $0.1 million for the three months ended June 30, 2026 and 2025, respectively, an increase of approximately $0.5 million, primarily due to higher cash equivalents and marketable securities balances.

Changes in fair value of the warrant liability

Changes in fair value of the warrant liability were a gain of $27.6 million and zero for the three months ended June 30, 2026 and 2025, respectively, an increase of $27.6 million. The gain on the change in fair value of the warrant liability is related to the warrants issued in conjunction with the October 2025 private placement. The fair value of the non-cash warrant liability at June 30, 2026 was $232.7 million. Accordingly, we recognized a non-cash gain of $27.6 million for the three-month period ended June 30, 2026, reflecting both the decrease in fair value of the warrant liability and losses recognized upon the exercise of warrants during 2026. This non-cash gain was recorded within other income (expense) in the statement of operations.

Comparison of Six Months Ended June 30, 2026 versus June 30, 2025

Research and Development Expenses

Research and development expenses were $12.4 million and $2.7 million for the six months ended June 30, 2026 and 2025, respectively, an increase of approximately $9.7 million. The increase in research and development expenses was primarily due to expenses related to the C19 trial as well as higher compensation costs. Non-cash stock compensation costs included in research and development expenses were $1.7 million and $0.2 million for the six months ended June 30, 2026 and 2025, respectively.

General and Administrative Expenses

General and administrative expenses were $14.9 million and $4.6 million for the six months ended June 30, 2026 and 2025, respectively, an increase of approximately $10.3 million. The increase in general and administrative expenses was primarily due to higher professional service fees as well as costs related to a severance agreement in the first quarter, which included a $6.6 million one-time, non-cash charge for the modification of the terms of previously granted stock options. Non-cash stock compensation costs included in general and administrative expenses were $9.2 million and $0.4 million for the six months ended June 30, 2026 and 2025, respectively.

Foreign Exchange Losses

Foreign exchange losses were $16 thousand and $29 thousand for the six months ended June 30, 2026 and 2025, respectively, a decrease of $13 thousand, primarily due to currency movements.

Investment Income

Investment income was $1.2 million and $0.3 million for the six months ended June 30, 2026 and 2025, respectively, an increase of approximately $0.9 million, primarily due to higher cash equivalents and marketable securities balances.

Changes in fair value of the warrant liability

Changes in fair value of the warrant liability were a loss of $81.8 million and zero for the six months ended June 30, 2026 and 2025, respectively, a decrease of $81.8 million. The loss on the change in fair value of the warrant liability is related to the warrants issued in conjunction with the October 2025 private placement. The fair value of the non-cash warrant liability at June 30, 2026 was $232.7 million. Accordingly, we recognized a non-cash loss of $81.8 million for the six-month period ended June 30, 2026, reflecting both the increase in fair value of the warrant liability and losses recognized upon the exercise of warrants during 2026. This non-cash loss was recorded within other income (expense) in the statement of operations.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), we believe the following non-GAAP measures are useful in evaluating our operating performance. Non-GAAP financial measures are included with the intent of providing investors with an understanding of our historical financial results and trends and to facilitate comparisons between periods. In addition, these non-GAAP financial measures are among the indicators our management uses for planning and forecasting purposes and measuring our performance. We believe that these non-GAAP financial measures, when considered together with U.S. GAAP measures, can enhance the understanding of our financial and operating performance. Non-GAAP financial measures have no standardized meaning and investors are cautioned that, unlike financial measures prepared in accordance with U.S. GAAP, non-GAAP measures may not be comparable with the calculation of similar measures for other companies. The limitations of using non-GAAP financial measures as performance measures are that they provide a view of our results of operations without including all events during a period and may not provide a comparable view of our performance to other companies in the biopharmaceutical industry. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Non-GAAP total liabilities is defined as GAAP total liabilities, excluding warrant liability and liability related to the sale of future royalties. Reconciliations of reported GAAP total liabilities to non-GAAP total liabilities as of June 30, 2026 and December 31, 2025 were as follows (in thousands):

Non-GAAP adjusted net income (loss) is defined as GAAP net income (loss), adjusted to exclude non-cash items related to: (i) stock-based compensation expense and (ii) changes in fair value of the warrant liability. Reconciliations of reported GAAP net income (loss) to non-GAAP adjusted net income (loss) for the three and six months ended June 30, 2026 and 2025 were as follows (in thousands):

Liquidity and Capital Resources

Sources of Liquidity

As of June 30, 2026, we had an accumulated deficit of approximately $796.7 million. We anticipate that we will continue to incur net losses for the foreseeable future as we continue the development and potential commercialization of our product candidates and to support our operations as a public company. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we may never generate product revenue or achieve profitability. As of June 30, 2026, we had approximately $75.4 million in cash, cash equivalents, marketable securities and restricted cash, which we believe will be sufficient to meet our operating commitments for the next 12 months from the date our interim condensed financial statements are issued. Our cash requirements primarily relate to expenditures to support the development of roluperidone, which includes advancing the program through the regulatory process.

The process of drug development can be costly and the timing and outcomes of clinical trials is uncertain. The assumptions upon which we have based our estimates are routinely evaluated and may be subject to change. The actual amount of our expenditures will vary depending upon many factors, including, but not limited to, the design, timing and duration of future clinical trials, the progress of our research and development programs, the infrastructure to support a commercial enterprise and the level of financial resources available. We can adjust our operating plan spending levels based on the timing of future clinical trials which are predicated upon adequate funding to complete the trials. We routinely evaluate the status of our clinical development programs as well as potential strategic options.

At-the-Market Equity Offering Program

On May 27, 2026, we entered into a Sales Agreement (the "Agreement") with Leerink Partners LLC (the "Agent") with respect to an "at-the market" offering program, pursuant to which we may issue and sell, from time to time, shares of our common stock, par value $0.0001 per share. The issuance and sale, if any, of shares of our common stock under the Agreement will be effected pursuant to our registration statement on Form S-3 (File No. 333-294203), which became effective on March 19, 2026, and the related prospectus supplement dated May 27, 2026 (the "Prospectus Supplement"), in each case filed with the U.S. Securities and Exchange Commission (the "SEC"). In accordance with the terms of the Agreement, under the Prospectus Supplement, we may offer and sell shares of our common stock having an aggregate offering price of up to $75.0 million from time to time through the Agent (such program, the "ATM Offering"). No shares of common stock were sold in any ATM Offering during the three or six months ended June 30, 2026, and no proceeds have been received from the program.

Private Placement of Series A Preferred Stock and Warrants

On October 21, 2025, we entered into a securities purchase agreement (the "Securities Purchase Agreement") with certain accredited investors, pursuant to which we agreed to issue and sell, in a private placement (the "Private Placement"), (i) 80,000 shares of Series A Convertible Preferred Stock, par value $0.0001 per share ("Series A Preferred Stock"), at a purchase price of $1,000 per share, (ii) tranche A warrants (the "Preferred Tranche A Warrants") to acquire shares of Series A Preferred Stock and (iii) tranche B warrants (the "Preferred Tranche B Warrants," together with the Preferred Tranche A Warrants, the "Preferred Warrants") to acquire shares of Series A Preferred Stock for an aggregate offering price of up to $200 million. The Private Placement closed on October 23, 2025 (the "Closing Date"), pursuant to which we received aggregate gross proceeds of $80.0 million, before deducting placement agent fees, financial advisor fees, and other offering expenses. We incurred approximately $5.7 million in offering costs, resulting in net proceeds of approximately $74.3 million. $3.1 million of the offering costs were allocated to the Preferred Warrants, which are classified as liabilities, and expensed as incurred. $2.6 million of the offering costs attributable to the issuance of Series A Preferred Stock were recorded as a reduction of the carrying value of the Preferred Stock. On the Closing Date, we recorded a loss on issuance of

convertible preferred stock and warrants of $321.5 million, reflecting the initial fair values of the Series A Preferred Stock of $184.6 million and the warrants of $216.9 million, offset by $80.0 million in gross proceeds received from investors. The value of the Series A Preferred Stock at issuance was determined based on the contractual conversion ratio multiplied by the closing price of our common stock on the Closing Date. For further discussion regarding the warrant liability and related valuation assumptions, please refer to Note 7, Warrant Liability, to our condensed consolidated financial statements appearing elsewhere in this Form 10-Q.

On December 23, 2025, following the announcement of the stockholders' approval of the issuance of common stock issuable upon conversion of the Series A Preferred Stock, we issued an aggregate of 36,280,992 shares of common stock upon the automatic conversion of an aggregate of 76,704 shares of Series A Preferred Stock in accordance with the terms set forth in the Certificate of Designation of Preferences, Rights and Limitations of the Series A Convertible Voting Preferred Stock (the "Certificate of Designation"). As of June 30, 2026, an aggregate of 3,296 shares of Series A Preferred Stock remain outstanding after the automatic conversion in December 2025, which are convertible into an aggregate of 1,559,008 shares of common stock, subject to the limitations on conversion set forth in the Certificate of Designation. Each share of Series A Preferred Stock automatically converted into the number of shares of common stock at the conversion price of $2.11 per share, rounded down to the nearest whole share, subject to the terms and limitations contained in the Certificate of Designation, including that shares of Series A Preferred Stock shall not be convertible if the conversion would result in a holder beneficially owning more than 9.99% (the "Beneficial Ownership Limitation") of our outstanding shares of common stock as of the applicable conversion date. By written notice to us, the holder may from time to time increase or decrease the Beneficial Ownership Limitation to any other percentage not in excess of 19.99% specified in such notice; provided, that any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to us.

During the six months ended June 30, 2026, an additional 2,243 shares of Series A Preferred Stock became outstanding upon the exercise of Preferred Tranche A Warrants, which are convertible into an aggregate of 1,060,939 shares of common stock, subject to the limitations on conversion set forth in the Certificate of Designation.

Each Preferred Tranche A Warrant has an exercise price of $1,000 and may only be exercised for cash. The Preferred Tranche A Warrants are immediately exercisable upon issuance for an aggregate of 80,000 shares of Series A Preferred Stock for an aggregate cash exercise price of up to $80 million until the tenth day following the date of our public announcement that we have achieved, on a statistically significant basis, the primary endpoint of our Phase 3 confirmatory trial of roluperidone in schizophrenia at the 12-week timepoint (the "Milestone Event"). As of June 30, 2026, an aggregate of 69,400 Preferred Tranche A Warrants remaining outstanding.

Each Preferred Tranche B Warrant has an exercise price of $1,000 and may be exercised by a cashless exercise. The Preferred Tranche B Warrants are exercisable for an aggregate of 40,000 shares of Series A Preferred Stock for an aggregate cash exercise price of up to $40 million commencing on the earlier of (i) our public announcement of the Milestone Event and (ii) the three year anniversary of the Closing Date. The Preferred Tranche B Warrants will expire on the four (4)-year anniversary of the Closing Date. As of June 30, 2026, an aggregate of 40,000 Preferred Tranche B Warrants remaining outstanding.

The Preferred Warrants are subject to forfeiture in the event the applicable holder engages in any Short Sales (as defined in the Securities Purchase Agreement) involving our securities during the 48-months period following the Closing Date. In addition, the shares of common stock and/or Series A Preferred Stock, as applicable, underlying the Preferred Tranche B Warrants are subject to reduction if the applicable holder sells or transfers any shares of Series A Preferred Stock purchased on the Closing Date or shares of common stock received upon conversion of the Series A Preferred Stock purchased on the Closing Date, in either case before the Exercisability Date (as defined therein), except to affiliates for no consideration.

Pursuant to the Certificate of Designation, no fractional shares or scrip representing fractional shares of common stock shall be issued upon the conversion of the Series A Preferred Stock. All fractional shares shall be rounded down to the nearest whole shares of common stock. Holders of Series A Preferred Stock are not entitled to receive any dividends except to the extent that dividends are paid on our common stock. If dividends are paid on shares of common stock, holders of Series A Preferred Stock are entitled to participate in such dividends on an as-converted basis. Upon the liquidation, dissolution, or winding up of us, each holder of Series A Preferred Stock will participate pari passu with any distribution of proceeds to holders of common stock. Holders of the Series A Preferred Stock are entitled to vote together with the holders of common stock on an as-if-converted basis on all matters submitted to a vote of stockholders.

Pursuant to the Securities Purchase Agreement, we filed a registration statement on Form S-3 (File No. 333-292410), which was declared effective by the SEC on January 6, 2026, covering the resale of the Registrable Securities (as such term is defined in the Securities Purchase Agreement). We have agreed to take all steps necessary to keep such registration statement effective at all times until all Registrable Shares have been resold, or there remains no Registrable Shares.

Warrant Exercises

During the three months ended June 30, 2026, an aggregate of 9,400 Preferred Tranche A Warrants were exercised at an exercise price of $1,000 per share, resulting in total proceeds of $9,400,000 to us. Upon exercise, 9,400 shares of Series A Preferred Stock were issued. Of these, 7,157 shares were immediately converted into an aggregate of 3,385,261 shares of our common stock, and the remaining 2,243 shares of Series A Preferred Stock remained outstanding.

During the six months ended June 30, 2026, an aggregate of 10,600 Preferred Tranche A Warrants were exercised at an exercise price of $1,000 per share, resulting in total proceeds of $10,600,000 to us. Upon exercise, 10,600 shares of Series A Preferred Stock were issued. Of these, 8,357 shares were immediately converted into an aggregate of 3,952,861 shares of our common stock, and the remaining 2,243 shares of Series A Preferred Stock remained outstanding.

No Preferred Tranche A Warrants were exercised during the three or six months ended June 30, 2025.

Seltorexant Royalties

We previously co-developed seltorexant with Janssen for the treatment of insomnia disorder and adjunctive treatment of MDD. During 2020, we exercised our right to opt out of a joint development agreement with Janssen for the future development of seltorexant. As a result, we were entitled to collect royalties in the mid-single digits on potential future sales of seltorexant worldwide in certain indications, with no further financial obligations to Janssen.

On January 19, 2021, we sold our royalty interest in seltorexant to Royalty Pharma for an upfront payment of $60 million and up to an additional $95 million in potential future milestone payments, contingent upon the achievement of certain clinical, regulatory and commercial milestones for seltorexant by Janssen.

Uses of Funds

To date, we have not generated any revenue from sales of products. We have only generated collaborative revenue due to opting out of our license and co-development agreement with Janssen. Furthermore, the $60 million payment received from Royalty Pharma for the sale of our royalty interests in seltorexant has been included on our balance sheet under liability related to the sale of future royalties. We do not know when, or if, we will generate any revenue from sales of our products, or from the potential future non-cash royalty revenue associated with the sale of our royalty interests in seltorexant to Royalty Pharma. We do not expect to generate significant revenue from product sales unless and until we obtain regulatory approval of and commercialize any of our product candidates. At the same time, we expect our expenses to increase in connection with our ongoing development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, our product candidates. We also expect to continue to incur costs associated with operating as a public company. In addition, subject to obtaining regulatory approval of any of our product candidates, we expect to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution.

Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our cash needs through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through government or other third party funding, commercialization, marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. There can be no assurance that such additional funding, if available, can be obtained on terms acceptable to us, and our ability to raise additional capital may be adversely impacted by global economic conditions, geopolitical conflicts, such as the war in Ukraine and hostilities in the Middle East, and other factors. If we are unable to obtain additional financing, future operations would need to be scaled back or discontinued. We believe that our existing cash, cash equivalents, marketable securities and restricted cash will be sufficient to meet our cash commitments for at least the next 12 months after the date that the financial statements are issued. The timing of future capital requirements depends upon many factors including the size and timing of future clinical trials, the timing and scope of any strategic partnering activity and the progress of other research and development activities.

Cash Flows

The tables below set forth our significant sources and uses of cash for the periods.

Net Cash Used in Operating Activities

Net cash used in operating activities of approximately $18.8 million during the six months ended June 30, 2026 was primarily due to our net loss of $107.9 million and a $3.6 million increase in prepaid expenses, partially offset by a $81.8 million increase in fair value of the warrant liability, and a stock-based compensation expense of $11.0 million.

Net cash used in operating activities of approximately $6.1 million during the six months ended June 30, 2025 was primarily due to our net loss of $7.0 million and a $0.7 million decrease in accounts payable, partially offset by stock-based compensation expense of $0.6 million, a $0.6 million decrease in prepaid expenses, and a $0.4 million increase in accrued expenses.

Net Cash Used in Investing Activities

Net cash used in investing activities of approximately $50.1 million during the six months ended June 30, 2026 was primarily due to the purchase of marketable securities of $55.1 million, partially offset by the maturity and redemption of marketable securities of $5.0 million.

Net cash used in investing activities was zero during the six months ended June 30, 2025.

Net Cash Provided by Financing Activities

Net cash provided by financing activities of approximately $11.3 million during the six months ended June 30, 2026 was primarily due to the proceeds from the exercise of Preferred Tranche A Warrants.

Net cash provided by financing activities was zero during the six months ended June 30, 2025.

Critical Accounting Policies and Estimates

In our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, our most critical accounting policies and estimates upon which our financial status depends were identified as those relating to research and development costs; goodwill; and the liability related to the sale of future royalties. We reviewed our policies and determined that those policies were our most critical accounting policies for the six months ended June 30, 2026.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board and are adopted by us as of the specified effective date. See Note 2 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and Note 2 in our condensed consolidated financial statements appearing elsewhere in this Form 10-Q for a description of recent accounting pronouncements applicable to our financial statements. We are currently evaluating the impact that recently issued, but not yet adopted, accounting pronouncements will have on the condensed consolidated financial statements or have determined they do not apply to our operations.

Smaller Reporting Company Status

We are a "smaller reporting company" as defined in the Securities Exchange Act of 1934, as amended ("Exchange Act"). We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these

scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter.