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

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 together with our unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes included in the final prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended. This discussion and analysis contains forward-looking statements that involve risks and uncertainties, including statements regarding our plans, objectives, expectations, intentions and projections. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those described under "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of future results.

Overview

We are a clinical-stage life science and drug development company focused on the development of novel therapeutics for the treatment of serious diseases associated with dysfunctions in human metabolism and high unmet medical needs, including post-bariatric hypoglycemia ("PBH") and gastroparesis. Our company was founded in 2021 by experienced leaders that have an in-depth understanding of drug development in the metabolic disease space. Our primary objective is to advance our lead investigational product candidate, mizagliflozin, a selective SGLT1 inhibitor in development for disorders related to glucose absorption and postprandial dysregulation, through clinical development and towards regulatory approval.

Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, and conducting research and development activities, including nonclinical and clinical testing of mizagliflozin. We have no products approved for commercial sale and have not generated any revenue from product sales. We are advancing a pipeline of novel therapeutic product candidates with established endpoints for regulatory approval, significant unmet medical needs and large potential market opportunities.

Since our inception, we have devoted substantially all of our resources to development of our mizagliflozin product candidate for PBH, gastroparesis, and GIP-dependent Cushing's Syndrome and VGX-2857 for weight maintenance, building our intellectual property portfolio, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations. We have historically funded our operations primarily through sales of our Series A convertible preferred stock and convertible promissory notes, which have generated approximately $11.5 million in aggregate gross proceeds.

We have incurred significant operating losses since inception and expect to continue to incur substantial losses for the foreseeable future. Our ability to generate revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates. Our net losses were approximately $384 thousand and $295 thousand for the three months ended June 30, 2026 and 2025, respectively, and approximately $860 thousand and $651 thousand for the six months ended June 30, 2026 and 2025, respectively. Our net losses were approximately $1.4 million and $2.2 million for the years ended December 31, 2025 and 2024, respectively. We had an accumulated deficit of approximately $11.7 million and $10.8 million as of June 30, 2026 and December 31, 2025, respectively.

We anticipate that our expenses and operating losses will increase substantially for the foreseeable future as we:

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advance our current research activities and further develop our pipeline;

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advance the development of our mizagliflozin product candidates for the treatment of PBH, gastroparesis, and GIP-dependent Cushing's Syndrome;

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advance the development of VGX-2857 for weight maintenance;

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discover and develop future product candidates we may identify;

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seek regulatory approval for any product candidates for which we successfully complete clinical trials;

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establish either internally or through contract manufacturing organizations manufacturing capacity capabilities to supply our clinical trials in our pipeline and eventually for commercialization;

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transition from a company with a research focus to a company capable of supporting commercial activities, including establishing sales, marketing, and distribution infrastructure;

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attract, hire and retain additional research and development, clinical, commercial, general and administrative personnel;

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develop, maintain, expand, protect and enforce our intellectual property portfolio;

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defend against any claims by third parties that we have infringed, misappropriated or otherwise violated any intellectual property of any such third party;

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acquire or in-license product candidates, intellectual property and technologies;

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confirm, maintain or obtain freedom to operate for any of our owned or licensed technologies and product candidates;

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establish and maintain collaborations;

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add operational, financial and management information systems and personnel; or

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incur additional legal, audit, accounting, compliance, insurance, investor relations and other expenses to operate as a public company that we did not incur as a private company.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more product candidates. If we obtain regulatory approval for any product candidate and do not enter into a commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, manufacturing, marketing, and distribution. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, reduce or eliminate the development and commercialization of our platform or delay our pursuit of potential in-licenses or acquisitions.

Components of our results of operations

Operating expenses

Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.

Research and development expenses

The largest component of our operating expenses since our inception has been research and development activities. Research and development expenses are expensed as incurred and consist, or may in the future consist, primarily of:

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external research and development expenses incurred under agreements with clinical sites, consultants and other third parties to conduct our clinical trials;

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costs related to chemistry, manufacturing and controls for our product candidates for preclinical studies and clinical trials;

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license fees, including any milestone-based payments;

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compensation and benefits, including stock-based compensation expense, for research and development personnel;

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the costs of acquiring research and development supplies and services;

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manufacturing process development costs;

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costs associated with regulatory activities;

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costs incurred in development, prosecution and maintenance of intellectual property; and

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other external services and consulting costs.

While we track our external research and development expenses on a program-specific basis, we do not allocate our internal costs associated with our discovery and development efforts because these costs are deployed across multiple programs and, as such, are not separately classified.

We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities to advance our programs and conduct clinical trials. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. As a result, expenses may vary significantly based on factors such as:

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the timing and progress of research and development, preclinical and clinical development activities;

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the number, scope and duration of clinical trials required for regulatory approval of our existing or future product candidates;

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the costs, timing, and outcome of regulatory review of any of our existing or future product candidates by the U.S. Food and Drug Administration ("FDA") and comparable foreign regulatory authorities, including the potential for such authorities to require that we perform more preclinical studies or clinical trials than those that we currently expect or for such authorities to change their requirements on studies that had previously been agreed to;

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the costs of manufacturing clinical and commercial supplies of our existing or future product candidates;

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our ability to maintain our existing licensing arrangements and establish new, strategic collaborations, licensing or other arrangements, and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty or other payments due under any such agreement;

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our implementation of various computerized informational systems and efforts to enhance operational systems;

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expenses incurred to attract, hire and retain skilled research and development personnel;

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per subject clinical trial costs;

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the number of sites included in our clinical trials;

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the countries in which our clinical trials are conducted;

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the length of time required to enroll subjects and initiate our clinical trials;

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the number of subject screen failures in clinical trials;

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the number of subjects that participate in our clinical trials;

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the drop-out and discontinuation rate of subjects;

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potential additional safety monitoring requested by regulatory agencies;

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the duration of subject participation in our clinical trials and follow-up, including the duration of open label extensions;

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the timing of license agreement milestone payments related to development, regulatory and commercial events;

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delays or difficulties associated with sourcing raw materials for manufacturing;

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delays or difficulties associated with manufacturing active pharmaceutical ingredients, clinical trial material, or drug product;

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mitigation or responses to potential health authority questions and/or inspections;

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the degree to which we obtain, maintain, defend and enforce our intellectual property rights; and

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the extent to which we establish collaboration, licensing or similar arrangements and the performance of any related third parties.

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

General and administrative expenses

General and administrative expenses consist primarily of compensation and benefits, including stock-based compensation expense, for general and administrative personnel; other expenses for outside professional services, including legal fees relating to corporate and other matters; professional fees for accounting, auditing, consulting and tax services; insurance costs; administrative travel expenses; website development costs; marketing and public relations costs; and facilities and information technology costs.

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support continued growth of our research and development activities. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with being a public company.

Other income (expense)

Expenses from convertible promissory notes and warrants

Other income (expense) includes expenses incurred in connection with our related party convertible promissory notes and warrants we issued in connection with our Series A convertible preferred stock financing, including changes in the fair value of warrant liabilities, the change in fair value of our related party convertible promissory notes, and the loss on issuance of our related party convertible promissory notes.

Interest income

Interest income is comprised of interest income earned on our cash and cash equivalents.

Results of operations

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

The following table summarizes our results of operations for the three months ended June 30, 2026, and 2025.

		Three Months Ended June 30,								Change
		2026				2025				$
Operating expenses:
Research and development		$	156,786				136,392				20,394
General and administrative			198,598				174,268				24,330
Total operating expenses			355,384				310,660				44,724
Other income (expense)
Change in fair value of warrant liability			2,831				14,154				(11,323	)
Change in fair value of convertible promissory notes payable, related party			(31,900	)			-				(31,900	)
Interest income			23				1,709				(1,686	)
Total other income (expense), net			(29,046	)			15,863				(44,909	)
Net loss		$	(384,430	)			(294,797	)			(89,633	)

Research and development expenses

The following table summarizes our research and development expenses for the periods indicated:

		Three Months Ended June 30, 2026				Three Months Ended June 30, 2025				Change $
Direct R&D Program Expenses (PBH)		$	6,400			$	-			$	6,400
Intellectual Property Legal Expenses		$	33,603			$	5,432			$	28,171
R&D Salaries		$	113,849			$	123,204			$	(9,355	)
Other R&D expense		$	2,934			$	7,756			$	(4,822	)
Total		$	156,786			$	136,392			$	20,394

Research and development expenses rose by $20 thousand, from $136 thousand in the three months ended June 30, 2025, to $157 thousand in the three months ended June 30, 2026, as discussed below.

The increase in research and development expenses for the three months ended June 30, 2026 was primarily attributable to increased spending on our PBH development program. Direct research and development program expenses related to PBH increased by approximately $6 thousand, primarily due to the clinical trial materials for the planned EMERGE phase 2b study, and an increase of $28 thousand in intellectual property legal expense offset by a decrease to other research and development support activities such as R&D salaries.

General and administrative expenses

General and administrative expenses increased by $24 thousand, from $174 thousand for the three months ended June 30, 2025, to $199 thousand for the three months ended June 30, 2026. The increase was primarily attributable to an increase of approximately $25 thousand in accounting and tax expenses associated with audit, review, valuation and tax-related services.

Other income (expense)

Change in fair value of warrant liability

The change in fair value of our warrant liability for the three months ended June 30, 2025, and the three months ended June 30, 2026 was a decrease of $14 thousand and $3 thousand, respectively. The change was a result of the remeasurement of the liability at the end of each reporting period. Details of our fair value measurements can be found in Note 2 to our unaudited condensed financial statements included elsewhere in this report.

Change in fair value of convertible promissory notes payable, related party

The change in fair value of our related party convertible promissory notes was an expense of $32 thousand during the three months ended June 30, 2026. The change was a result of the remeasurement of the liability at the period ended June 30, 2026. There was no such activity during the three months ended June 30, 2025. Details of our fair value measurements can be found in Note 2 to our unaudited condensed financial statements included elsewhere in this report.

Interest income

Interest income, which includes interest income on our cash and cash equivalents, decreased by $2 thousand, from $2 thousand for the three months ended June 30, 2025, to less than $0.1 thousand for the three months ended June 30, 2026, due to decreases in our available cash and cash equivalents. We did not have any material interest expense during the three months ended June 30, 2025, or 2026.

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

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

		Six Months Ended June 30,								Change
		2026				2025				$
Operating expenses:
Research and development		$	394,695				305,703				88,992
General and administrative			423,841				377,155				46,686
Total operating expenses			818,536				682,858				135,678
Other income (expense)
Change in fair value of warrant liability			9,908				26,892				(16,984	)
Change in fair value of convertible promissory notes payable, related party			(51,400	)			-				(51,400	)
Interest income			146				4,550				(4,404	)
Total other income (expense), net			(41,346	)			31,442				(72,788	)
Net loss		$	(859,882	)			(651,416	)			(208,466	)

Research and development expenses

The following table summarizes our research and development expenses for the periods indicated:

		Six Months Ended June 30, 2026				Six Months Ended June 30, 2025				Change $
Direct R&D Program Expenses (PBH)		$	75,932			$	14,725			$	61,207
Intellectual Property Legal Expenses		$	79,895			$	20,421			$	59,474
R&D Salaries		$	232,726			$	256,784			$	(24,058	)
Other R&D expense		$	6,142			$	13,773			$	(7,631	)
Total		$	394,695			$	305,703			$	88,992

Research and development expenses rose by $89 thousand, from $306 thousand in the six months ended June 30, 2025, to $395 thousand in the six months ended June 30, 2026, as discussed below.

The increase in research and development expenses for the six months ended June 30, 2026 was primarily attributable to increased spending on our PBH development program. Direct research and development program expenses related to PBH increased by approximately $61 thousand, primarily due to clinical trial materials for the planned EMERGE Phase 2b study, and intellectual property legal expenses increased by approximately $59 thousand. The increases were offset by a decrease of $24 thousand in research and development salaries and an $8 thousand decrease to other research and development support activities.

General and administrative expenses

General and administrative expenses increased by $47 thousand, from $377 thousand for the six months ended June 30, 2025, to $424 thousand for the six months ended June 30, 2026. The increase was primarily attributable to an increase of approximately $80 thousand in accounting and tax expenses associated with audit, review, valuation and tax-related services. This increase was partially offset by decreases of approximately $15 thousand in professional fees, $16 thousand in dues and subscription expenses and $9 thousand in personnel-related costs.

Other income (expense)

Change in fair value of warrant liability

The change in fair value of our warrant liability for the six months ended June 30, 2025, and the six months ended June 30, 2026 was a decrease of $27 thousand and $10 thousand, respectively. The change was a result of the remeasurement of the liability at the end of each reporting period. Details of our fair value measurements can be found in Note 2 to our unaudited condensed financial statements included elsewhere in this report.

Change in fair value of convertible promissory notes payable, related party

The change in fair value of our related party convertible promissory notes was an expense of $51 thousand during the six months ended June 30, 2026. The change was a result of the remeasurement of the liability at the period ended June 30, 2026. There was no such activity during the six months ended June 30, 2025. Details of our fair value measurements can be found in Note 2 to our unaudited condensed financial statements included elsewhere in this report.

Interest income

Interest income, which includes interest income on our cash and cash equivalents, decreased by $4 thousand, from $5 thousand for the six months ended June 30, 2025, to $0.1 thousand for the six months ended June 30, 2026, due to decreases in our available cash and cash equivalents. We did not have any material interest expense during the six months ended June 30, 2026, or 2025.

Liquidity and capital resources

Sources of liquidity

Since our inception, we have incurred significant operating losses and negative cash flows from operations and expect to continue to incur significant operating losses and negative cash flows from operations for the foreseeable future. To date, prior to our IPO, we funded our operations primarily through sales of our Series A convertible preferred stock and convertible promissory notes, which generated approximately $11.5 million in aggregate gross proceeds through June 30, 2026. As of June 30, 2026 and December 31, 2025, we had approximately $193 thousand and $601 thousand in cash and cash equivalents, respectively. We have not yet generated any revenue from product sales and do not expect to in the foreseeable future, if at all, as our product candidates are in various phases of clinical and preclinical development.

In August 2026, we completed the IPO, pursuant to which we issued and sold 7,187,500 shares of our common stock at a public offering price of $13.00 per share, including 937,500 additional shares of its common stock pursuant to the exercise in full by the underwriter of its option to purchase shares of common stock from us at the IPO price. As a result, we received net proceeds from the IPO of approximately $84.9 million, after deducting underwriting discounts, commissions and offering expenses payable by us.

Future funding requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the development of our product candidates and operate as a public company. The timing and amount of our operating expenditures will depend largely on:

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the timing and progress of research and development, preclinical and clinical development activities;

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the number, scope and duration of clinical trials required for regulatory approval of our existing or future product candidates;

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the costs, timing, and outcome of regulatory review of any of our existing or future product candidates by the FDA and comparable foreign regulatory authorities, including the potential for such authorities to require that we perform more preclinical studies or clinical trials than those that we currently expect or for such authorities to change their requirements on studies that had previously been agreed to;

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the costs of manufacturing clinical and commercial supplies of our existing or future product candidates;

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the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our existing or future product candidates for which we receive regulatory approval;

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the cost of filing and prosecuting our patent applications, and maintaining and enforcing our patents and other intellectual property rights;

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our ability to enter into strategic collaborations, licensing or other arrangements, and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty or other payments due under any such agreement;

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any product liability or other lawsuits related to our existing or future product candidates;

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our implementation of various computerized informational systems and efforts to enhance operational systems;

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expenses incurred to attract, hire and retain skilled personnel;

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the costs of operating as a public company;

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our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payers;

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the extent to which we acquire or invest in businesses, products, and technologies;

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the effect of competing technological and market developments; and

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the impact of other factors, including inflation, economic uncertainty and geopolitical tensions, which may exacerbate the magnitude of the factors discussed above.

We had $193 thousand and $601 thousand in cash and cash equivalents as of June 30, 2026 and December 31, 2025, respectively. In December 2025, we received $750 thousand in gross proceeds from the issuance of our convertible promissory notes.

Based on our current operating plan, we estimate that our existing cash and cash equivalents, together with the net proceeds from the IPO, will be sufficient to fund our projected operating expenses and capital expenditure requirements for at least the next 12 months. 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.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest for existing investors may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect existing investors' rights as a stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or marketing, distribution 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 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, reduce or eliminate our 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.

Cash flows

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

		Six Months ended June 30,
		2026				2025
Net cash used in operating activities		$	(323	)			(573	)
Net cash used in investing activities			-				-
Net cash used in financing activities			(85	)			-
Net decrease in cash and cash equivalents		$	(408	)			(573	)

Cash flows from operating activities

Net cash used in operating activities for the six months ended June 30, 2026 was approximately $323 thousand. This was primarily due to our net loss of approximately $860 thousand, partially offset by non-cash charges of approximately $41 thousand and a net source of cash from changes in operating assets and liabilities of approximately $495 thousand. The changes in operating assets and liabilities primarily consisted of an increase in accounts payable of approximately $104 thousand and an increase in accrued expenses of approximately $386 thousand. Non-cash charges primarily consisted of an increase in the fair value of our related party convertible promissory notes of approximately $51 thousand, partially offset by a decrease in the fair value of our warrant liability of approximately $10 thousand.

Net cash used in operating activities for the six months ended June 30, 2025 was approximately $573 thousand. This was primarily due to our net loss of approximately $651 thousand, adjusted for non-cash charges of approximately $22 thousand and changes in operating assets and liabilities of approximately $100 thousand. Non-cash charges primarily consisted of stock-based compensation expense of approximately $5 thousand, partially offset by a decrease in the fair value of our warrant liability of approximately $27 thousand.

Cash flows from investing activities

There were no cash flows from investing activities for the six months ended June 30, 2026, or June 30, 2025.

Cash flows from financing activities

Net cash used in financing activities for the six months ended June 30, 2026 was approximately $85 thousand, which consisted entirely of payments related to offering costs in connection with the Company's IPO. There were no cash flows from financing activities for the six months ended June 30, 2025.

Contractual obligations and commitments

Leases

We have no lease obligations.

Kissei License Agreement and other agreements

In December 2021, we and Kissei Pharmaceutical Co., Ltd. ("Kissei") entered into an exclusive license agreement (the "Kissei License Agreement") pursuant to which we have payment obligations that are contingent upon future events, such as the achievement of specified development and regulatory milestones, and in some cases, we are required to make royalty payments in connection with the sales of products developed under the agreement. Although we could be required to make milestone payments under the Kissei License Agreement, we are unable to estimate the timing or likelihood of achieving the milestones or realizing sales from products. For additional details regarding the Kissei License Agreement, see the section titled "Business-Kissei License Agreement" in our Prospectus that forms a part of our Registration Statement, which was filed with the SEC on August 12, 2026 pursuant to Rule 424(b)(4) (the "IPO Prospectus").

We enter into contracts in the normal course of business with clinical trial sites and clinical supply manufacturers and with vendors for preclinical studies and clinical trials, research supplies and other services and drugs for operating purposes. These contracts generally provide for termination after a notice period, and, therefore, are cancellable contracts. In addition, certain of our supply agreements contain minimum purchase commitments in certain situations, the timing and likelihood of which we cannot estimate at this time.

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 Securities and Exchange Commission (the "SEC").

Recently issued accounting pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our unaudited condensed financial statements included elsewhere in this report.

Critical accounting estimates

Our critical accounting policies and estimates are described in "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates" in our IPO Prospectus. We have reviewed and determined that those critical accounting estimates remain the Company's critical accounting estimates as of and for the three months and six months ended June 30, 2026.