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

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

The following discussion and analysis are meant to provide material information relevant to an assessment of the financial condition and results of operations of our Company, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources, so as to allow investors to better view our Company from management's perspective. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements for the quarter ended June 30, 2026, included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under Item 1A. "Risk Factors" in the Company's Annual Report for the fiscal year ended December 31, 2025 filed with the SEC on March 26, 2026 (the "Annual Report").

Overview and Recent Developments

We are a clinical stage biopharmaceutical company focused on developing novel therapies for the treatment of orphan pulmonary and fibrosis indications with no approved or limited effective treatments. We currently have one lead product candidate in clinical development, LTI-03. Our pipeline includes:

In the fourth quarter of 2025, we decided to pause development activities related to LTI-01 for an indefinite period.

In May 2025, we initiated screening and recruitment of patients in the RENEW Phase 2 clinical trial of LTI-03. The RENEW trial is a Phase 2 multi-center, randomized, double-blind, placebo-controlled study evaluating the safety, tolerability, and efficacy of LTI-03 patients with IPF. In addition, the trial is designed to assess the activity of inhaled dry powder LTI-03 across multiple biomarkers and to measure lung function and the potential for healthy tissue regeneration. The trial is designed to enroll approximately 120 patients diagnosed with IPF within 5 years of screening, who may be receiving standard of care antifibrotic therapy, across up to 50 sites globally, including sites in the United States, United Kingdom, Germany, Australia and Poland. Patients will be randomized into two blinded placebo-controlled cohorts that will run concurrently. Patients in the low dose cohort will receive 2.5 mg of either LTI-03 or placebo administered twice daily, or BID, for a total dose of 5 mg/day, while participants in the high dose cohort will receive 5 mg BID for a total dose of 10 mg/day. The primary endpoint is the incidence of treatment-emergent adverse events from Day 1 through Week 24. The key secondary endpoint is the efficacy of LTI-03 measured through forced vital capacity, percent predicted FVC and high-resolution computer tomography, in collaboration with Qureight Ltd. Patients will undergo a 28-day screening period prior to being randomized and entering the 24-week treatment period, with a four-week follow-up.

In October 2025, we received authorization from the European Medicines Agency, or the EMA, to initiate our Phase 2 RENEW trial of our lead candidate, LTI-03, at sites in Germany and Poland. We had previously received regulatory clearance from the U.K.'s Medicines and Healthcare products Regulatory Agency, or the MHRA. In January 2026, we received orphan drug designation from the EMA for LTI-03.

As of the date of this Quarterly Report, we activated sites and are seeking to enroll patients in all countries in the trial. In March 2026, we dosed our first patient in the RENEW Phase 2 clinical trial of LTI-03. We expect to report initial interim data on some proportion of patients in the fourth quarter of 2026.

We have not completed the development of any of our product candidates, have not generated any revenue from product sales and have never generated an operating profit.

In May 2026, we completed an underwritten public offering of 57,500,000 shares of our common stock at a public offering price of $1.00 per share, or the May 2026 Offering. Aggregate gross proceeds from the May 2026 Offering were approximately $57.5 million, and net proceeds to the Company were approximately $53.1 million after deducting underwriting discounts, commissions, and offering expenses of approximately $4.4 million. As of June 30, 2026, we had $43.6 million in cash, cash equivalents and investments.

Since our inception, we have incurred significant losses on an aggregate basis. Our net losses were $6.4 million and $6.8 million for the three months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $413.5 million. These losses have resulted primarily from costs incurred in connection with research and development activities, licensing and patent

investment and general and administrative costs associated with our operations as well as the impairment loss on intangible assets. We expect to continue to incur operating losses for the foreseeable future.

As of June 30, 2026, we had cash, cash equivalents and investments of $43.6 million. Based on our current operating plan, we believe that our existing cash, cash equivalents and investments as of June 30, 2026 will be sufficient to enable us to fund our planned operating expense and capital expenditure requirements into the first quarter of 2028. We also believe the funds will be sufficient to enable us to complete the Phase 2 RENEW clinical trial of LTI-03.

Master Services Agreement

In April 2025, we entered into a master services agreement with a third party Contract Research Organization, or CRO, under which the CRO has agreed to perform certain services in accordance with written work orders. The work orders set forth the obligations of the parties with regard to conducting the clinical research study entitled "A Randomized, Double-Blind, Placebo-Controlled, Phase 2, Safety, Tolerability and Efficacy Study of Caveolin1-Scaffolding-Protein-Derived Peptide (LTI-03) in Patients with IPF", under our Protocol LTI-03-2001. Pursuant to the agreement, we had contracted for up to $17.0 million of master services. In August 2025, this master services agreement was terminated with less than $0.4 million of future commitment for the Company.

In December 2025, we entered into a project addendum with a third party CRO for the purposes of setting forth the responsibilities and obligations of the parties in regards to conducting a certain clinical research program entitled "A Phase 2, Randomized, Double-Blind, Placebo-Controlled Study of the Safety, Tolerability and Efficacy of Caveolin-1-Scaffolding-Protein-Derived Peptide in Patients with IPF" under our Protocol LTI-03-2001. Pursuant to the project addendum and the contract modification signed in July 2026, we have contracted to receive up to $20.8 million of master services as we may request from time to time at our discretion.

Components of Our Results of Operations

Revenue

We have not generated any revenue from product sales and we do not expect to generate any revenue from the sale of products in the foreseeable future.

Operating Expenses

Our expenses since inception have consisted solely of research and development costs, general and administrative, and restructuring costs.

Research and Development Expenses

For the periods presented in this Quarterly Report on Form 10-Q, research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, and include:

We expense research and development costs as incurred. We recognize costs for certain development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors and our clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid or accrued research and development expenses.

In addition, we typically use our employee and infrastructure resources across our development programs. We track outsourced development costs and milestone payments made under our licensing arrangements by product candidate or development program, but we do not allocate personnel costs, license payments made under our licensing arrangements or other internal costs to specific development programs or product candidates because these costs are deployed across multiple programs and, as such, are not separately classified.

Research and development activities are central to our business model. The duration, costs and timing of clinical trials and development of a product candidate will depend on a variety of factors, including:

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA, or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipated would be required for the completion of clinical development of a product candidate, or if we experience significant trial delays due to patient enrollment or other reasons, we could be required to expend significant additional financial resources and time on the completion of clinical development.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance and corporate and administrative functions. General and administrative expenses are comprised of professional fees associated with being a public company including costs of accounting, auditing, legal, regulatory, tax and consulting services associated with maintaining compliance with exchange listing and the SEC requirements, director and officer insurance costs; and both public and investor relations costs. General and administrative expenses also include legal fees relating to patent and corporate matters; legal and other professional fees relating to our strategic process; other insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

Other (Expense) Income, net

Interest and Other Income

Interest income consists of interest income earned on our cash, cash equivalents and investments. Historically, our interest income had not been significant due to low investment balances and low interest earned on those balances. We anticipate that our interest income will fluctuate in the future in response to our cash, cash equivalents and investments and the interest rate environment.

Other (expense) income, net consists of the income recognized under the Option Agreement with Advancium, gains or losses recognized from non-routine items such as accretion on short-term investments, and gains or losses recognized from foreign currency transactions, original issue discount, or OID, related to the PPA, the promissory notes, and the disposal of fixed assets.

We anticipate that our interest income and investment accretion will fluctuate in the future in response to our then-current cash, cash equivalents and investments, and then-current interest rates.

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:

Research and Development Expenses

Research and development expenses for the three months ended June 30, 2026 were $3.6 million, compared to $4.3 million for the three months ended June 30, 2025. Direct research and development services costs decreased $0.7 million as compared to the three months ended June 30, 2025 mainly due to the timing of services provided by the third party CRO.

General and Administrative Expenses

General and administrative expenses were $2.4 million for the three months ended June 30, 2026, compared to $2.6 million for the three months ended June 30, 2025. The decrease of $0.2 million in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily due to decreased employee related expenses of less than $0.1 million as a result of a decrease in stock-based compensation expense, and decreased facilities and other expenses of less than $0.1 million.

Other (Expense) Income, net

Other (expense) income, net of $0.3 million for the three months ended June 30, 2026 primarily consisted of interest expense as a result of the amortization of discount on notes payable related to the promissory notes, offset by interest income in our then-current cash, cash equivalents and investments. We anticipate that our interest income and investment accretion will fluctuate in the future in response to our then-current cash, cash equivalents and investments, and then-current interest rates.

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:

Research and Development Expenses

Research and development expenses for the six months ended June 30, 2026 were $6.7 million, compared to $7.3 million for the six months ended June 30, 2025. The decrease was primarily due to the timing of services provided by the third party CRO. During the six months ended June 30, 2026, we spent $4.2 million on clinical trials, $1.1 million on manufacturing, $1.0 million on employee and related expenses, $0.3 million on regulatory and development consulting and less than $0.1 million on facilities and other expenses. During the six months ended June 30, 2025, we spent $3.8 million on clinical trials, $1.9 million on manufacturing, and $0.5 million on regulatory and development consulting as well as $1.1 million on employee and related expenses.

General and Administrative Expenses

General and administrative expenses were $4.6 million for the six months ended June 30, 2026, compared to $5.1 million for the six months ended June 30, 2025. The decrease of $0.5 million in the six months ended June 30, 2026 as compared to the

six months ended June 30, 2025 was primarily due to decreased professional fees of $0.3 million as a result of a decrease in legal expense and decreased employee and related expenses of $0.2 million as a result of a decrease in stock-based compensation expense.

Other Income, net

Other (expense) income, net of $0.9 million for the six months ended June 30, 2026 primarily consisted of interest expense as a result of the amortization of discount on notes payable related to the promissory notes, offset by interest income in our then-current cash, cash equivalents and investments. Other (expense) income, net for the six months ended June 30, 2025 primarily consisted of interest income and accretion in our then-current cash, cash equivalents and investments.

Liquidity and Capital Resources

Since inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our lead product candidate, LTI-03, or any future product candidates. We expect that our research and development and general and administrative costs will continue to increase significantly, including in connection with conducting clinical trials and manufacturing for our lead product candidates or any future product candidates to support potential future commercialization and providing general and administrative support for our operations, including the costs associated with operating as a public company.

As of June 30, 2026, we had cash, cash equivalents and investments of $43.6 million. Based on our current operating plan, we believe that our existing cash, cash equivalents and investments as of June 30, 2026 will be sufficient to enable us to fund our planned operating expense and capital expenditure requirements into the first quarter of 2028. However, our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully advance the clinical development of LTI-03 or any future product candidates. If we are not able to generate sufficient revenue in a timeframe that satisfies our cash needs, we will need to raise more capital. In the event we require additional capital, we will endeavor to acquire additional funds through various financing sources, including our ATM, follow-on equity offerings, debt financing and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue-producing operations and meaningful commercial success with a smaller amount of capital. If we are unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce costs in order to conserve cash.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods presented:

Operating Activities.

During the six months ended June 30, 2026, net cash used in operating activities was $12.1 million primarily due to our net loss of $12.2 million and cash used in the change in operating assets and liabilities of $1.7 million, offset by non-cash charges of $1.8 million. Non-cash charges resulted primarily from non-cash warrant issuance cost of $0.4 million, net amortization of discount on notes payable of $1.1 million and stock-based compensation expense of $0.3 million. Changes in our operating assets and liabilities during the six months ended June 30, 2026 consisted primarily of an increase of $1.7 million in other non-current assets, a decrease of $0.7 million in accrued expenses and other current liabilities, offset by an increase of $0.4 million in accounts payable and a decrease of $0.3 million in prepaid expenses and other current assets.

During the six months ended June 30, 2025, net cash used in operating activities was $12.6 million primarily due to our net loss of $12.3 million and cash used in the change in operating assets and liabilities of $0.8 million, offset by non-cash charges of $0.5 million. Non-cash charges resulted primarily from stock-based compensation expense of $0.5 million. Changes in our operating assets and liabilities during the six months ended June 30, 2025 consisted primarily of a decrease of $3.5 million in other long-term liabilities and accrued expenses and other current liabilities, an increase of $2.3 million in other non-current assets, and an increase of $0.1 million in prepaid expenses and other current assets, offset by an increase of $5.1 million in accounts payable.

Investing Activities.

During the six months ended June 30, 2026, net cash used in investing activities was $35.1 million primarily due to our short term investments of $32.1 million and long term investments of $3.0 million. There was no cash used in or provided by investing activities during the six months ended June 30, 2025.

Financing Activities.

During the six months ended June 30, 2026, net cash provided by financing activities was $52.5 million primarily due to the net proceeds from the May 2026 Offering described above, offset by the discount on notes payable that were received and repaid during the six months ended June 30, 2026.

During the six months ended June 30, 2025, net cash provided by financing activities was $5.5 million primarily due to the April 2025 Transactions described above.

Contractual and other obligations

We enter into contracts in the normal course of business with CROs for clinical and preclinical research studies, external manufacturers for product for use in our clinical trials, and other research supplies and other services as part of our operations. These contracts generally provide for termination on notice, and therefore are cancelable contracts.

In December 2025, we entered into a project addendum with a third party CRO for the purposes of setting forth the responsibilities and obligations of the parties in regards to conducting a certain clinical research program entitled "A Phase 2, Randomized, Double-Blind, Placebo-Controlled Study of the Safety, Tolerability and Efficacy of Caveolin-1-Scaffolding-Protein-Derived Peptide in Patients with IPF" under our Protocol LTI-03-2001. Pursuant to the project addendum and the contract modification signed in July 2026, we had contracted for up to $20.8 million of master services.

Critical Accounting Estimates

Our management's discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

During the three and six months ended June 30, 2026, there were no material changes to the items that we disclosed as our critical accounting estimates in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report.

Global and Macroeconomic Developments

We are subject to continuing risks and uncertainties in connection with legislative, regulatory, political, geopolitical and macroeconomic developments beyond our control, including inflationary pressures, general economic slowdown or a recession, high interest rates, changes in monetary policy or foreign currency exchange rates, changes in trade policies, including tariffs and other trade restrictions or the threat of such actions, instability in financial institutions, the ongoing conflicts in Ukraine and in the Middle East. Most of these developments and factors are outside of our control and could exist for an extended period of time. We will continue to evaluate the nature and extent of the potential impacts to our business, results of operations, liquidity and capital resources. See the section titled "Risk Factors" found elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report for additional information.

Smaller Reporting Company Status

We are a "smaller reporting company" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250.0 million or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700.0 million. For so long as we continue to be a smaller reporting company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Recently Issued Accounting Pronouncements

We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 to our condensed consolidated financial statements to this Quarterly Report on Form 10-Q, such standards will not have a material impact on our condensed consolidated financial statements or do not otherwise apply to our operations.