Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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

The following discussion should be read in conjunction with our unaudited condensed financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and the accompanying notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission, or SEC, on March 26, 2026, or the Annual Report. This discussion and other parts of this Quarterly Report contain forward-looking statements based upon current beliefs, plans, and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements of our plans, objectives, expectations, intentions, forecasts and projections. Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of several factors including, but not limited to, those set forth under the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and you should carefully read the section titled "Risk Factors" to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled "Special Note Regarding Forward-Looking Statements." You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Overview

We are a late-stage biopharmaceutical company developing novel therapies for the treatment of a wide range of neuropsychiatric disorders including schizophrenia, bipolar depression, adjunctive treatment of major depressive disorder and other diseases. We are building a pipeline that leverages the broad therapeutic potential of our lead product candidate, LB-102, which we believe has the opportunity to be the first benzamide antipsychotic drug approved for neuropsychiatric disorders in the United States. LB-102 is currently in late-stage clinical development for schizophrenia (pivotal Phase 3 NOVA-2 trial) and bipolar depression (Phase 2 ILLUMINATE-1 trial). Concurrently with the Phase 3 NOVA-2 trial, we are running an outpatient, open label trial (NOVA-3) to accrue the requisite safety population required to support NDA submission as well as other clinical trials and non-clinical studies typically required by FDA at the time of approval. We are also planning to conduct a Phase 2 clinical trial evaluating LB-102 as an adjunctive treatment in major depressive disorder, or MDD. LB-102 is a new chemical entity and a methylated derivative of amisulpride, a second-generation antipsychotic drug approved in over 50 countries, not including the United States, because the development and regulatory requirements of the U.S. Food and Drug Administration, or FDA, for amisulpride were incompatible with patent coverage on the drug. Amisulpride is a generic drug that has been extensively used in clinical practice following its initial approval in France in the 1980s, generating at least two million monthly prescriptions in 2023 in a subset of 16 continental European countries. Among these European prescriptions for amisulpride, our data suggest that approximately 60% are for schizophrenia and schizoaffective disorders and approximately 20% are for mood disorders and the remainder are for anxiety and a variety of other indications.

We designed LB-102 to address the limitations of amisulpride with the aim of creating a product candidate with the potential for a differentiated therapeutic profile and strong intellectual property protection. We believe LB-102's mechanism of action, data from our recently completed Phase 2 trial (NOVA-1) of LB-102 in acute schizophrenia, and the heritage of clinical experience with amisulpride support the continued development of LB-102 in both psychosis and mood disorders. In the future, additional expansion opportunities for LB-102 may include predominantly negative symptoms of schizophrenia, Alzheimer's disease psychosis and agitation, as well as other neuropsychiatric diseases. We believe that LB-102, if approved, can become a mainstay of psychiatric practice by offering a potentially attractive alternative to branded and generic therapeutics for the treatment of schizophrenia, bipolar depression, adjunctive MDD and other neuropsychiatric diseases, given the compelling balance of clinical activity and tolerability observed to date.

The U.S. market for branded antipsychotic drugs was approximately $12 billion as of 2025. Antipsychotics that have expanded beyond schizophrenia into mood disorder indications have realized substantial increases in revenue. Despite the widespread use of generic antipsychotic drugs, several of these branded drugs each generate U.S. sales greater than $1 billion annually. Additionally, while available therapeutics to treat schizophrenia, bipolar depression, and MDD demonstrate clinical benefit, a significant unmet need remains for a treatment that delivers a more favorable risk-benefit profile by balancing tolerability with rapid onset and sustained, clinically meaningful efficacy with once-daily dosing. This includes addressing persistent residual symptoms-across both psychosis and mood disorders-that continue to impair functioning despite available therapies, underscoring the opportunity for improvement in the management of these conditions.

Our current pipeline is summarized below:

*Subject to positive Phase 3 data.

We anticipate that based on our current plans, our current cash, cash equivalents and marketable securities will support our planned operations into the second quarter of 2029.

Since our inception in 2015, we have devoted substantially all of our resources to the research and development of LB-102 by conducting clinical trials and preclinical studies and recruiting management and technical staff to support these operations. To date, we have funded our operations primarily through the aggregate gross proceeds of approximately $549.5 million from the sales of our redeemable convertible preferred stock, common stock, convertible notes, the proceeds of our initial public offering, or IPO, and proceeds from our private placement. On September 12, 2025, we closed the IPO and issued 21,850,000 shares of common stock at a price to the public of $15.00 per share, including 2,850,000 shares issued upon the exercise in full of the underwriters' over-allotment option to purchase additional shares. We received gross proceeds of $327.8 million. Net proceeds were $302.3 million, after deducting underwriting commissions and other offering costs totaling $25.4 million. In February 2026, we received gross proceeds of approximately $100.0 million from our private placement. Net proceeds were approximately $93.8 million, after deducting financial advisory and other financing.

We have not generated any revenue from product sales and we have incurred recurring losses since our inception. Our net losses were $19.1 million and $5.3 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had an accumulated deficit of $148.6 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future. We anticipate that our operating expenses and capital expenditures will increase substantially with our ongoing activities, particularly as we:

We will not generate any revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing, and distribution. As a result, we will need substantial additional funding to support our operating

activities as we advance our product candidates through clinical development, seek regulatory approval, and prepare for and, if any of our product candidates are approved, proceed to commercialization. Until such time, if ever, as we can generate substantial revenue from product sales to support our cost structure, we expect to finance our operating activities through a combination of public or private sales of equity, government or private party grants, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. Adequate funding may not be available to us on acceptable terms, or at all.

If we are unable to obtain funding, we will be forced to delay, reduce, or eliminate some or all of our research and development programs, product portfolio expansion, or commercialization efforts, which could adversely affect our business prospects, or we may be unable to continue operations. Although we continue to pursue these plans, there is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all.

As of March 31, 2026, we had cash, cash equivalents and marketable securities of $365.6 million. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated operating and capital expenditure requirements into the second quarter of 2029. See "-Liquidity and Capital Resources."

Royalty Agreements

In August 2023, contemporaneously with the closing of the Series C financing, we entered into several Amended and Restated Royalty Agreements with certain of our existing investors, co-founders, former and current directors, and former and current executive officers, including Zachary Prensky, Andrew Vaino, Ph.D., and Marc Panoff, none of whom were new investors of our Series C preferred stock. We received no consideration as part of the Amended and Restated Royalty Agreements. Pursuant to the Amended and Restated Royalty Agreements, we are obligated to pay royalties to all of the holders in an aggregate amount up to 2.75% of net sales arising from LB-102 worldwide through December 31, 2035. Thereafter, we are obligated to pay royalties to such holders in an aggregate amount up to 3.25% in perpetuity. Net sales are defined in these agreements as the gross payments received on total commercial sales of LB-102 less certain standard deductions, whether received by us or any licensee of LB-102. As of March 31, 2026, certain of our former and current officers and their affiliates held 1.13% of the future royalties.

Components of Results of Operations

Revenue

To date, we have not recognized any revenues, including revenues from product sales. We do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for LB-102 or any future product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for the development of LB-102, which include:

We expense research and development costs in the periods in which they are incurred. Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks, using information provided to us by our vendors and analyzing the progress of our clinical trials or other services performed. Significant judgment and estimates are made in determining the accrued expense balances at the end of any reporting period.

Research and development activities are central to our business model. We expect our research and development expenses to increase substantially for the foreseeable future as we advance LB-102 and any of our future product candidates into and through later stage clinical trials, pursue regulatory approval of our product candidates, build our operational and commercial capabilities for supplying and marketing our products, if approved, and expand our pipeline of product candidates.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. Furthermore, product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. The actual probability of success for our product candidates may be affected by a variety of factors, including the safety and efficacy of our product candidates, conduct of clinical trials, investment in our clinical programs, competition, manufacturing capability, and commercial viability. We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion of costs of our research and development projects or if, when, and to what extent we will generate revenue from the commercialization and sale of LB-102 or any future product candidates, if approved by the FDA and other applicable regulatory authorities.

Our future research and development costs may vary significantly based on factors such as:

A change in the outcome of any of these 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.

We also expect to incur significant manufacturing costs as our CDMOs develop scaled commercial manufacturing processes. However, we do not believe that it is possible at this time to accurately project expenses through commercialization. There are numerous factors associated with the successful commercialization of LB-102 or any future product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based

on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development programs and plans.

General and Administrative Expenses

General and administrative expenses consist primarily of:

We expect that our general and administrative expenses will increase in the future as we expand our headcount to support our continued research and development of our product candidates. We also expect to incur increased expenses associated with operating as a public company including:

In addition, if we obtain regulatory approval for any of our product candidates and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing, and distribution activities.

Non-Operating Income

Non-operating income consists primarily of interest income on our cash and cash equivalents and marketable securities, and non-cash changes in the fair value of our outstanding warrant liabilities.

Results of Operations

Comparison of the Three Months Ended March 31, 2026 and 2025

The following table summarizes our results of operations for the three months ended March 31, 2026 and 2025 (in thousands):

Revenue

We generated no revenue during the three months ended March 31, 2026 and 2025.

Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended March 31, 2026 and 2025 (in thousands):

Research and development expenses were $14.6 million for the three months ended March 31, 2026, compared to $3.4 million for the three months ended March 31, 2025. The increase of $11.2 million was primarily due to: (i) a $4.6 million increase in clinical trial expenses related to our Phase 3 trial of LB-102 in the treatment of patients with acute schizophrenia; (ii) a $3.0 million increase related to the conduct of our Phase 2 trial of LB-102 in the treatment of patients with bipolar depression; (iii) a $1.7 million increase in expenses related to the formulation and production of LB-102 for use in our active and planned clinical trials; (iv) a $0.5 million increase in preclinical and other direct expenses primarily related to preclinical testing of LB-102; (v) a $0.9 million increase in personnel-related expenses primarily due to an increase in headcount; and (vi) a $0.6 million increase in other research and development expenses, primarily due to increased use of consultants.

General and Administrative Expenses

General and administrative expenses were $7.5 million for the three months ended March 31, 2026, compared to $3.0 million for the three months ended March 31, 2025. The increase of $4.5 million was primarily due to: (i) a $1.5 million increase in personnel-related expenses primarily due to an increase in headcount; (ii) a $1.6 million increase in stock-based compensation expense primarily related to stock options granted and repriced in connection with the IPO, as well as new hire grants, and (iii) a $1.4 million increase in professional fees, including accounting and legal fees and consulting fees partially related to costs associated with being a public company.

Non-operating Income

Non-operating income was $3.1 million for the three months ended March 31, 2026, compared to $1.1 million for the three months ended March 31, 2025. The increase of $1.9 million was primarily due to a $2.6 million increase in interest income as a result of higher cash balances in interest-bearing accounts in 2026, offset by a $0.6 million decrease in gain on change in fair value of derivative instruments compared to the same period from last year.

Liquidity and Capital Resources

As of March 31, 2026, we had $365.6 million of cash, cash equivalents and marketable securities. We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. Until required for use in our business, we typically invest our cash, in accordance with our investment policy, in money market funds and fixed income securities including U.S. treasury bills and government securities. We attempt to minimize credit risk related to our cash and cash equivalents and marketable securities by maintaining a well-diversified portfolio that limits the amount of exposure as to maturity and investment type.

In February 2026, we completed a private placement pursuant to which we issued and sold to certain investors an aggregate of (i) 3,306,571 shares of our common stock at a purchase price of $21.17 per share and (ii) pre-funded warrants to purchase 1,417,107 shares of our common stock at a purchase price of $21.1699 per pre-funded warrant, which represents the per share purchase price less the $0.0001 per share exercise price of each pre-funded warrant. The transaction closed on February 6, 2026 and resulted in aggregate gross proceeds of approximately $100.0 million, consisting of approximately $70.0 million from the sale of common stock and approximately $30.0 million from the sale of pre-funded warrants. Net proceeds were approximately $93.8 million, after deducting financial advisory fees and other financing costs of approximately $6.2 million. The pre-funded warrants are exercisable at any time for $0.0001 per share, have no expiration date, and are classified in permanent equity. In connection with the private placement, we entered into a registration rights agreement with the investors pursuant to which we filed a registration statement on Form S-1 (File No. 333-294900) on April 6, 2026, which was declared effective by the SEC on April 14, 2026.

Our primary use of cash has been to fund operating expenses, which consist of research and development and general and administrative expenditures. As we progress through the phases of development of LB-102 and any of our future product candidates, we anticipate that we will incur increasing losses in future quarters and years compared to historical periods.

Cash Flows

The following table sets forth a summary of the net cash flow activity for the three months ended March 31, 2026 and 2025 (in thousands):

Operating Activities

Cash used in operating activities for the three months ended March 31, 2026 was $23.3 million, consisting of net loss of $19.1 million adjusted for non-cash items, including a $2.6 million charge for stock-based compensation expense offset by a gain on the change in the fair value of the warrant liabilities of $0.2 million. Additionally, we had outflows of $6.8 million due to a change in our net operating assets and liabilities for the three months ended March 31, 2026, including a $10.2 million increase in prepaid expenses and other current assets primarily related to deposits made to our CRO for start-up clinical trial expenses, partially offset by a $3.5 million increase in accounts payable and accrued expense primarily related to timing of payments and clinical trial expenses.

Cash used in operating activities for the three months ended March 31, 2025 was $8.1 million, consisting of net loss of $5.3 million partially offset by non-cash items, including (i) gain on the change in fair value of the warrant liabilities of $0.8 million and (ii) stock-based compensation expense of $0.6 million. Additionally, we had outflows of $2.8 million due to a change in our net operating assets and liabilities for the three months ended March 31, 2025, including a $2.9 million decrease in accounts payable and accrued expense primarily related to timing of payments and clinical trial expenses, and a $0.1 million decrease in prepaid expenses.

Investing Activities

There were no material investing activities for the three months ended March 31, 2026.

Cash provided by investing activities for the three months ended March 31, 2025 was $5.0 million primarily related to $2.5 million in proceeds from the sale of marketable securities and $2.5 million in maturities of marketable securities.

Financing Activities

Cash provided by financing activities for the three months ended March 31, 2026 was approximately $93.8 million primarily related to the net proceeds from the private placement in February 2026.

There were no financing activities for the three months ended March 31, 2025.

Future Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing activities, as we continue to advance LB-102 and any of our future product candidates through clinical trials, scale the organization in preparation for a commercial launch of LB-102, if approved, as well as additional costs associated with operating as a public company.

As of March 31, 2026, we had cash, cash equivalents and marketable securities of $365.6 million. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities, will be sufficient to meet our anticipated operating and capital expenditure requirements into the second quarter of 2029.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with research, development, and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital

requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including:

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. Further, 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.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity financings, debt financings, collaborations with other companies or other strategic transactions. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures, or declaring dividends. If we raise additional funds through collaborations, strategic alliances, or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our 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, limit, reduce, or terminate our research, product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Further, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development activities. We currently have no credit facility or committed sources of capital. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs.

Contractual Obligations and Commitments

Leases

In May 2024, we entered into a new lease agreement for office space in New York, New York totaling approximately 8,900 square feet. The term of this lease commenced on June 21, 2024, which is the date we took control over the leased premises. The lease term continues through March 2032. In November 2025, we entered into an amendment to the lease agreement providing for the lease of approximately 4,600 square feet of additional office space. The lease amendment term continues through March 2032. See Note 7 Leases to our unaudited condensed financial statements for more information regarding such leases.

Funding Commitments

We contract in the normal course of business with CROs, CDMOs, and other third parties for clinical trials, preclinical research studies, and testing and manufacturing services. These contracts are cancelable by us upon prior written notice. Payments due upon cancellation consist primarily of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation. These payments are not included in the preceding table as the amount and timing of such payments are not known.

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 of our unaudited condensed financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Critical Accounting Estimates

This management's discussion and analysis of our financial condition and results of operations is based on our unaudited condensed financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our unaudited condensed financial statements. In accordance with GAAP, we evaluate our estimates and judgments on an ongoing basis, including those related to accrued research and development expenses, common stock warrant liabilities, and stock-based compensation. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be 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. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting estimates from those described under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Emerging Growth Company and Smaller Reporting Company Status

We are an "emerging growth company" as defined in the JOBS Act, and we may remain an emerging growth company for up to five years following the completion of our IPO. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period, and therefore, we are not subject to the same requirements to adopt new or revised accounting standards as other public companies that are not emerging growth companies; however, we may adopt certain new or revised accounting standards early. We will remain an "emerging growth company" until the earliest to occur of: (i) the last day of the fiscal year in which we have $1.235 billion or more in annual revenue; (ii) the date on which we first qualify as a large accelerated filer under the rules of the SEC; (iii) the date on which we have, in any prior three-year period issued more than $1.0 billion in non-convertible debt securities; and (iv) the last day of the fiscal year following the fifth anniversary of the consummation of our IPO.

We are also a "smaller reporting company" as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. 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 our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.