Quarterly Report for Quarter Ending September 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 condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q (this "Quarterly Report") and our audited financial statements and related notes thereto for the year ended December 31, 2025 included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission (the "SEC") on March 26, 2026 (the "Annual Report"). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks, uncertainties, and assumptions. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those set forth in the Annual Report and in other filings with the SEC.

Overview

We are a clinical-stage pharmaceutical company developing IKT-001 for Pulmonary Arterial Hypertension ("PAH"). Our lead product candidate, known as IKT-001, is a prodrug of imatinib mesylate ("imatinib"), for PAH which is an orphan indication. Imatinib was first approved in the United States in 2001 for various cancers and blood disorders and, following more than 20 years of clinical use, has a well-characterized safety profile with the first reported use of imatinib in PAH occurring in 2005. PAH is a progressive, life-threatening disease characterized by pulmonary vascular remodeling and elevated pulmonary vascular resistance that affects approximately 50,000 Americans. We have completed a non-human primate safety study and a bioequivalence clinical study in healthy volunteers to determine the doses of IKT-001 that are equivalent to imatinib. Our Phase 3 clinical study, named IMPROVE-PAH (IKT-001 for Measuring Pulmonary Vascular Resistance and Outcome Variables in a Phase 3 Evaluation of PAH), which is a single pivotal global study, is presently enrolling patients with 28 country regulatory approvals globally and 79 clinical sites activated to date, and three additional pending country regulatory approvals and one planned country regulatory submission.

Recent Developments

In July 2026, we sold 25,000,000 shares of our common stock to RA Capital Management through our at-the-market ("ATM") facility for gross proceeds of $50.0 million. Subsequently, in July 2026, 18,030,000 of these shares of common stock were exchanged for pre-funded warrants to purchase shares of common stock.

Following our submission of an Orphan Drug Designation ("ODD") application to the FDA for IKT-001 for PAH in April 2026, the FDA's Office of Orphan Products Development granted ODD for IKT-001 in July 2026.The grant of ODD applies to the active moiety of IKT-001, imatinib mesylate, rather than a specific formulation. ODD also provides potential development incentives, including eligibility for tax credits on qualified clinical trial costs, exemption from certain FDA user fees, and the potential for seven years of market exclusivity upon regulatory approval.

In October 2026, we announced the appointment of Scott M. Wasserman, M.D., to our board of directors, effective October 19, 2026. Concurrent with Dr. Wasserman's appointment, Dennis Berman resigned from our board of directors.

Components of Operating Results

Operating Expenses

Research and Development

Research and development activities account for a significant portion of our operating expenses. We record research and development expenses as incurred. Research and development expenses incurred by us for the discovery and development of our product candidates and prodrug technologies include:

A portion of our research and development expenses are direct external expenses, which we track on a program-specific basis from inception of the program.

Program expenses include expenses associated with our most advanced product candidates and the discovery and development of compounds that are potential future candidates. We also track external expenses associated with our third-party research and development efforts. All external costs are tracked by therapeutic indication. We do not track certain other operating expenses incurred for our research and development programs on a program-specific basis. These expenses primarily relate to stock-based compensation and office consumables.

At this time, we can only estimate the nature, timing and costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales or licensing of our product candidates. This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of:

A change in any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate. We expect our research and development expenses to increase for the next several years as we continue to implement our business strategy, advance our current programs, expand our research and development efforts, seek regulatory approvals for any product candidates that successfully complete clinical trials, access and develop additional product candidates and incur expenses associated with hiring additional personnel to support our research and development efforts. In addition, product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

Our direct research and development expenses consist principally of external costs, such as fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical studies, and costs related to acquiring and manufacturing clinical study materials. We allocate salary and benefit costs directly related to specific programs. We do not allocate stock-based compensation costs, depreciation or other indirect costs that are deployed across multiple projects under development and, as such, the costs are separately classified as other research and development expenses in the table below:

(1) The nine months ended September 30, 2025 amount includes a one-time (non-cash) charge of $7.4 million for the acquired IPR&D related to the acquisition of CorHepta Pharmaceuticals, Inc. ("CorHepta").

(2) Other research and development expenses include stock-based compensation expense of $1.5 million and $1.7 million for the three months ended September 30, 2026 and 2025, respectively, and $4.8 million and $3.8 million for the nine months ended September 30, 2026 and 2025, respectively.

Selling, General and Administrative

Selling, general and administrative expenses include personnel-related expenses, such as salaries, benefits, travel and non-cash stock-based compensation expense and expenses for outside professional services. Outside professional services consist of legal, accounting and audit services and other consulting fees. Allocated expenses consist of rent expenses related to our former office in Lexington, Massachusetts not otherwise included in research and development expenses.

As a public company, we incur expenses related to compliance with the rules and regulations of the SEC and those of Nasdaq, additional insurance expenses, investor relations activities and other administrative and professional services. We also are increasing our headcount as we advance our product candidates through clinical development, which will also require us to increase our selling, general and administrative expenses.

Results of Operations

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

The following table sets forth the significant components of our results of operations:

Research and Development

Research and development expenses increased by $7,350,169, or 96.1%, to $14,999,866 from $7,649,697 in the prior comparable period. The $7.4 million increase in research and development expenses was primarily due to an increase of $7.0 million in PAH expenses associated with the advancement of our single pivotal Phase 3 study for IKT-001 in PAH. There was also a net increase of $0.7 million in other research and development partially offset by a decrease of $0.3 million in the risvodetinib program, which was discontinued and out-licensed during the second quarter of 2025.

Selling, General and Administrative

Selling, general and administrative expenses increased by $1,617,688 or 28.8%, to $7,229,191 from $5,611,503 in the prior comparable period. The $1.6 million increase was primarily driven by a $1.1 million increase in stock-based compensation expense, an increase of $0.4 million in personnel-related costs, and an increase of $0.1 million in other expenses.

Change in Fair Value Contingent Consideration

Change in fair value contingent consideration decreased by $492,827 or 100%, to $0 from $492,827 in the prior comparable period. The decrease is a result of the change in fair value of the contingent consideration related to the CorHepta transaction from March 31, 2025 to September 30, 2025. The service milestone was satisfied and the contingent liability settled on February 21, 2026.

Other Income

Other income increased by $923,630 or 110.2% to $1,761,723 from $838,093 in the prior comparable period. The increase was driven by an increase in interest earned on our cash, cash equivalents and marketable securities.

Comparison of the Nine Months Ended September 30, 2026 and 2025

The following table sets forth the significant components of our results of operations:

Research and Development

Research and development expenses increased by $15,798,237, or 67.4%, to $39,232,480 from $23,434,243 in the prior comparable period. The prior period included a $7.4 million non-cash charge allocated to PAH related to the CorHepta transaction, which did not recur in the current period. Excluding the impact of this prior period charge, the increase in research and development was primarily driven by an increase in PAH costs associated with our single pivotal Phase 3 clinical study. There was also a net increase of $1.1 million in other research and development, primarily due to stock-based compensation, partially offset by a decrease of $0.5 million in the risvodetinib program, which was discontinued and out-licensed during the second quarter of 2025.

Selling, General and Administrative

Selling, general and administrative expenses increased by $5,482,320, or 32.7%, to $22,262,845 from $16,780,525 in the prior comparable period. The $5.5 million increase was primarily driven by an increase of $4.6 million in stock-based compensation expense due primarily to additional equity grants to retain employees given the acceleration of our Phase 3 clinical study, an increase of $0.6 million in personnel-related costs, and an increase of $0.5 million in other expenses, partially offset by a $0.2 million decrease in legal, consulting and compliance costs.

Change in Fair Value Contingent Consideration

Change in fair value contingent consideration decreased by $1,642,757, or 81.5%, to $373,354 from $2,016,111 in the prior comparable period. The decrease is a result of the change in fair value of the contingent consideration related to the CorHepta transaction from December 31, 2025 to February 21, 2026, the date the service milestone was satisfied and the contingent liability settled.

Other Income

Other income increased by $2,008,447, or 75.1%, to $4,682,566 from $2,674,119 in the prior comparable period. The increase was driven by interest earned on our cash, cash equivalents and marketable securities.

Liquidity and Capital Resources

Sources of Liquidity

From our inception up until our December 2020 initial public offering, we funded our operations primarily through private, state and federal contracts and grants. Since our initial public offering, we have funded operations through public offerings and sales under our ATM program. In October 2024, we raised approximately $99.6 million in net proceeds from a private placement and in November 2025, we raised approximately $107.6 million in net proceeds from our underwritten public offering.

On June 20, 2025, we entered into an Open Market Sale AgreementSM (the "Sales Agreement") with Jefferies LLC, as sales agent ("Jefferies"), pursuant to which we may, from time to time, issue and sell shares of our common stock through or to Jefferies. Under the terms of the Sales Agreement, Jefferies may sell the shares of our common stock at market prices by any method that is deemed to be an "at the market offering" as defined in Rule 415 under the Securities Act of 1933, as amended. As of December 31, 2025, no shares of our common stock had been sold under the Sales Agreement. During the first nine months of 2026, we sold 27,166,262 shares of common stock pursuant to the Sales Agreement for an aggregate net proceeds of $52.0 million, including 25,000,000 shares sold to RA Capital Management.

On September 10, 2026, we received $1.0 million related to the exercise of 730,000 Series A-1 Warrants.

At September 30, 2026, we had cash, cash equivalents and marketable securities of $193.3 million.

We have incurred recurring losses and at September 30, 2026 had an accumulated deficit of $199.1 million.

Future Funding Requirements

To date, we have not generated any revenue from the sale of commercial products. We do not expect to generate any significant revenue from product sales unless and until we obtain regulatory approval of and successfully commercialize any of our product candidates and we do not know when, or if, this will occur at all. We expect to continue to incur significant losses for the foreseeable future, and we expect the losses to significantly increase as we continue the development of, and seek regulatory approvals for our lead product candidate, IKT-001, and begin to develop and commercialize any future approved products which we may in-license or develop. We are subject to all of the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial additional funding in connection with our continuing operations.

Until we can generate a sufficient amount of revenue from the commercialization of our product candidates, if ever, we expect to finance our incremental cash needs through a combination of equity offerings, debt financings, working capital lines of credit, and potential licenses and collaboration agreements. Additional working capital may not be available timely or on commercially reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts on a timely basis or on terms acceptable to us, we may have to significantly delay, reduce or discontinue the development or commercialization of our product candidates. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing stockholders, increased fixed payment obligations and the existence of securities with rights that may be senior to those of our common stock. If we incur indebtedness, we could become subject to covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Additionally, any future collaborations we enter into with third parties may provide capital in the near term but limit our potential cash flow and revenue in the future. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

Since our inception, we have incurred significant losses and negative cash flows from operations. We have an accumulated deficit of $199.1 million at September 30, 2026. We expect to incur substantial additional losses in the future as we conduct and expand our research and development activities.

We expect to fund our operations through public equity or private equity or debt financings, as well as other sources. However, we may be unable to raise additional working capital, or if we are able to raise additional working capital, we may be unable to do so on a timely basis or commercially favorable terms. Our failure to raise capital or enter into such other arrangements if and when needed would have a negative impact on our business, results of operations and financial condition and our ability to continue to develop our product candidates.

We believe that our existing cash, cash equivalents and marketable securities as of September 30, 2026, will enable us to fund our operating requirements for at least the next twelve months following the date of this Quarterly Report. We estimate our cash and cash equivalents and marketable securities as of September 30, 2026 will support operations through topline data readout in Part B of our ongoing global Phase 3 IMPROVE-PAH clinical study, assuming the full and timely exercise of all of the outstanding Series A and B Warrants and provided our product development efforts meet projected timelines. However, we have based these estimates on assumptions that may prove to be mistimed or wrong, and we could deplete our working capital sooner than planned.

The timing and amount of our operating expenditures will depend largely on:

A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

Cash Flows

The following table sets forth a summary of the primary sources and uses of cash for each of the periods presented below:

Net Cash Flows Used in Operating Activities

Net cash flows used in operating activities for the nine months ended September 30, 2026, totaled $41,855,564, and consisted primarily of a net loss of $56.4 million adjusted for non-cash stock compensation of $16.4 million, a decrease in the fair value of contingent consideration of $0.4 million, non-cash accretion on marketable securities of $3.2 million, an increase in accounts payable and accrued expenses and other current liabilities of $7.7 million, an increase in prepaid expenses and other current assets of $1.1 million, an increase in prepaid research and development of $4.8 million, and an increase in other assets of $0.1 million.

Net cash flows used in operating activities for the nine months ended September 30, 2025, totaled $20,270,491, and consisted primarily of a net loss of $35.5 million adjusted for non-cash stock compensation of $10.8 million, a write-off of in-process research and development of $7.4 million, a decrease in the fair value of contingent consideration of $2.0 million, noncash accretion on marketable securities of $0.6 million, a decrease in accounts payable of $0.4 million, an increase in prepaid research and development of $1.1 million, an increase in accrued expenses and other current liabilities of $1.0 million and a decrease in other assets of $0.3 million and a decrease in other liabilities of $0.1 million.

Cash Provided by (Used In) Investing Activities

Net cash flows used in investing activities for the nine months ended September 30, 2026, totaled $99,003,803, of which $122.3 million was provided by maturity of marketable securities and $221.3 million was used for the purchase of marketable securities.

Net cash flows provided by investing activities for the nine months ended September 30, 2025, totaled $2,151,977, of which $41.6 million was provided by maturity of marketable securities, $39.0 million was used for the purchase of marketable securities and $0.4 million related to acquired in-process research and development associated with the CorHepta acquisition discussed above.

Cash Provided by (Used In) Financing Activities

Net cash flows provided by financing activities for the nine months ended September 30, 2026, totaled $53,340,356, which consisted of $52.0 million of net proceeds from the issuance of common stock under the Sales Agreement, $1.0 million from the exercise of Series A-1 Warrants, and $0.3 million of net proceeds from the issuance of common stock related to exercise of stock options.

Net cash flows used in financing activities for the nine months ended September 30, 2025, totaled $102,359, which consisted of $0.3 million of net proceeds from the issuance of common stock related to the exercise of stock options and $0.4 million of deferred offering costs in connection with the Sales Agreement.

Contractual Obligations and Commitments

Lease Obligations

We previously leased office space in Lexington, Massachusetts under an operating lease that expired on September 30, 2025. As of September 30, 2026, we have no remaining lease obligations under this arrangement. We received a refund of our security deposit in July 2026. The refund did not have a material impact on our liquidity or results of operations.

Clinical and Manufacturing Agreements

We have entered into various agreements with contract research organizations ("CROs") and contract manufacturing organizations ("CMOs") to support our ongoing single pivotal Phase 3 clinical study, IMPROVE-PAH, as well as related manufacturing activities. We may also need other CMOs for manufacturing redundancy and to support commercial production, if we achieve regulatory approval for IKT-001. These agreements generally include both fixed and variable components and, in certain cases, are non-cancelable or subject to termination fees.

As of September 30, 2026, our estimated remaining contractual commitments under these arrangements, excluding performance-based milestone payments, were approximately $107.6 million for CRO services and $8.7 million for CMO services, which we expect to incur primarily through 2030. The timing of these expenditures is dependent on several factors, including patient enrollment rates, clinical site activation, and manufacturing production schedules.

A portion of our CRO commitments include performance-based milestone payments, of which approximately $7.5 million of the total contracted value is contingent upon the achievement of specified criteria by the vendor. The timing and likelihood of these payments are uncertain and depend on the progress and outcomes of the clinical trial. While one milestone of $0.4 million has been achieved to date, the remaining milestones are not currently considered probable and, accordingly, are not reflected in our accrued liabilities as of September 30, 2026.

We expect that our contractual commitments will represent a significant portion of our future cash outflows as we advance our IMPROVE-PAH clinical trial and related manufacturing activities. The majority of these costs are expected to be incurred over the next two to three years, although the actual timing may vary based on clinical and operational factors.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if:

While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results could differ from those estimates, and the differences could be material. For a discussion of the critical accounting estimates that affect the unaudited condensed consolidated financial statements, see "Critical Accounting Estimates" included in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report.

See Note 3 to our unaudited condensed consolidated financial statements for a discussion of our significant accounting policies.