Equillium, Inc.

Previous wording

We are a clinical-stage biotechnology company leveraging a deep understanding of immunobiology to develop novel therapeutics to treat severe autoimmune and inflammatory, or immuno-inflammatory, disorders with high unmet medical need. Our strategy is focused on advancing the clinical development of our product candidates, including potentially pursuing additional indications and acquiring new product candidates and platforms to expand our pipeline. We intend to commercialize our product candidates either independently or through partnerships or otherwise monetize our pipeline through strategic transactions.

Current wording

We are a clinical-stage biotechnology company leveraging a deep understanding of immunobiology to develop novel therapeutics to treat severe autoimmune and inflammatory, or immuno-inflammatory, disorders with high unmet medical need.

Previous wording

Our current clinical-stage product candidates consist of itolizumab (EQ001) and EQ101. Itolizumab (EQ001) is a first-in-class anti-CD6 immune-modifying monoclonal antibody, or mAb, that selectively targets the CD6-ALCAM signaling pathway to downregulate pathogenic T effector cells while preserving T regulatory cells critical for maintaining a balanced immune response. This pathway plays a central role in modulating the activity and trafficking of T cells that drive a number of immuno-inflammatory diseases. EQ101 is a first-in-class, selective, tri-specific inhibitor of IL-2, IL-9 and IL-15, key disease-driving, clinically validated cytokine targets aimed at addressing unmet needs across a range of immuno-inflammatory indications. We have also been engaged in the discovery and optimization of additional peptide-based product candidates that selectively target multiple cytokines, including the preclinical development of EQ302, a first-in-class, selective, bi-specific inhibitor of IL-15 and IL-21 for oral delivery. In October 2024, we announced that we are pausing further activities related to EQ101 and EQ302 as we prioritize the development of itolizumab (EQ001). Our novel and differentiated pipeline of first-in-class immunology assets has the potential to address unmet medical needs in numerous areas, including dermatology, gastroenterology, rheumatology, hematology, transplant science, oncology and pulmonology.

Current wording

Itolizumab (EQ001), our most advanced clinical-stage product candidate, is a first-in-class anti-CD6 immune-modifying monoclonal antibody, or mAb, that selectively targets the CD6-ALCAM signaling pathway to downregulate pathogenic T effector cells while preserving T regulatory cells critical for maintaining a balanced immune response. This pathway plays a central role in modulating the activity and trafficking of T cells that drive a number of immuno-inflammatory diseases. We acquired our rights to itolizumab (EQ001) pursuant to a collaboration and license agreement with Biocon SA (subsequently assigned to Biocon Limited, or together, Biocon) in May 2017, which has been subsequently amended, or Biocon License.

Previous wording

We have a proprietary product discovery platform that we can leverage to design novel peptides to target and inhibit multiple cytokines that are involved in validated biological and disease pathways. For example, we recently highlighted preclinical data from EQ302, a preclinical-stage, first-in-class, selective, bi-specific inhibitor of IL-15 and IL-21 for oral delivery. We also have ongoing translational biology programs to assess the therapeutic utility of our product candidates in additional indications where the mechanism of action is believed to play an important role in the pathogenesis of a particular disease. Our selection of current and future indications is driven by our analysis of the scientific, translational, clinical and commercial rationale for advancing our product candidates into further development.

Current wording

We acquired the exclusive worldwide rights to EQ101 and a proprietary platform for discovering additional, novel multi-cytokine targeting product candidates, such as EQ302, through the acquisition of Bioniz Therapeutics, Inc., or Bioniz, in February 2022. That product discovery platform can be leveraged to design novel peptides to target and inhibit multiple cytokines that are involved in validated biological and disease pathways. Our selection of current and future indications is driven by our analysis of the scientific, translational, clinical and commercial rationale for advancing our product candidates into further development.

Previous wording

Since our inception, substantially all of our efforts have been focused on organizing and staffing our company, business planning, raising capital, in-licensing rights to itolizumab (EQ001), conducting non-clinical research, including the initial preclinical development of EQ302, filing three Investigational New Drug applications, or INDs, conducting clinical development of EQ101, EQ102 and itolizumab (EQ001), conducting formulation development and chemistry, manufacturing and controls, or CMC, activities, conducting business development activities such as the acquisition of Bioniz, the Asset Purchase Agreement with Ono and other transactions, initiating a stock repurchase program, and performing the general and administrative activities associated with operating a public company. Furthermore, in connection with the acquisition of Bioniz, we expanded our pipeline from one product candidate to multiple product candidates, all at various stages of development. This expansion may accelerate the rate at which our operating losses increase as we incur costs to further the development and seek regulatory approval for these product candidates. We have generated revenue from the Asset Purchase Agreement related to the one-time, upfront payment from Ono in exchange for the Option as well as from the itolizumab (EQ001) development funding from Ono. We have not generated any revenue from product sales, milestone payments or royalties. Since inception, we have primarily financed our operations through debt and equity financings and revenue generated from the Asset Purchase Agreement.

Current wording

Since our inception, substantially all of our efforts have been focused on organizing and staffing our company, business planning, raising capital, in-licensing rights to itolizumab (EQ001), conducting preclinical development of EQ504 and EQ302, filing three Investigational New Drug applications, or INDs, conducting clinical development of itolizumab (EQ001), EQ101 (a clinical-stage, first-in-class, selective, tri-specific inhibitor of IL-2, IL-9 and IL-15) and EQ102 (a clinical-stage, first-in-class, selective, bi-specific inhibitor of IL-15 and IL-21), conducting chemistry, manufacturing and controls, or CMC, and formulation development activities, conducting business development activities such as the acquisitions of Bioniz and Ariagen, the Asset Purchase Agreement with Ono Pharmaceutical Co., Ltd., or Ono, and other transactions not completed, implementing a prior stock repurchase program, and the general and administrative activities associated with operating a public company. Furthermore, in connection with our acquisitions, we expanded our pipeline to multiple product candidates, all at various stages of development. This expansion may accelerate the rate at which our operating losses increase as we incur costs to further the development and seek regulatory approval for these product candidates. We have generated revenue from our Asset Purchase Agreement with Ono, related to a one-time, upfront payment from Ono in exchange for an exclusive option to acquire our rights to itolizumab (EQ001), or the Option, as well as from itolizumab (EQ001) development funding from Ono. Ono made a strategic business decision to allow its Option to expire on October 30, 2024 and, as a result, the Asset Purchase Agreement automatically terminated on that date pursuant to its terms. We have not generated any revenue from product sales, milestone payments or royalties. Since inception, we have primarily financed our operations through debt and equity financings and revenue generated from the Asset Purchase Agreement.

Previous wording

We have incurred losses since our inception. For the nine months ended September 30, 2024 and 2023, our net losses were $2.3 million and $11.0 million, respectively. As of September 30, 2024, we had an accumulated deficit of $188.0 million. Substantially all of our operating losses resulted from expenses incurred in connection with our research and development activities, non-clinical and clinical activities, acquired in-process research and development, and general and administrative costs associated with our operations.

Current wording

We have incurred losses since our inception. For the three months ended March 31, 2025 and 2024, our net losses were $8.7 million and $2.7 million, respectively. As of March 31, 2025, we had an accumulated deficit of $202.5 million. Substantially all of our operating losses resulted from expenses incurred in connection with our research and development activities, preclinical and clinical activities, acquired in-process research and development, and general and administrative costs associated with our operations.

Previous wording

We expect to continue to incur significant expenses and operating losses into the foreseeable future. Although we have recently implemented operating changes and plan to take further action as necessary to decrease our spending and conserve our cash, we anticipate, subject to receiving additional capital, our expenses to potentially increase substantially as we advance our research and development activities, including the ongoing and future clinical development of itolizumab (EQ001), the potential resumption of development activities related to EQ101 and EQ302, potentially expand the indications in which we conduct clinical development of our product candidates, potentially acquire and/or develop new product candidates, including preclinical drug candidates, seek regulatory approval for and potentially commercialize any approved product candidates, hire additional personnel, protect our intellectual property and incur general corporate costs. Further, with the expiration of Ono’s option, we no longer receive reimbursement from Ono for our itolizumab (EQ001) development expenses incurred after October 30, 2024, which is expected to adversely impact our near-term net cash used in operations.

Current wording

We expect to continue to incur significant expenses and operating losses into the foreseeable future if we advance our research and development activities, including any future development of EQ504, itolizumab (EQ001) and EQ302, potentially expand the indications for which we conduct clinical development of our product candidates, potentially acquire or develop new product candidates, including preclinical drug candidates identified through our multi-cytokine targeting drug discovery platform, seek regulatory approval for and potentially commercialize any approved product candidates, hire additional personnel, protect our intellectual property, and incur general corporate costs. Although we have implemented operating changes and plan to take further actions as necessary to decrease our expenditures and conserve our cash, we expect that our existing cash and cash equivalents as of March 31, 2025, will enable us to fund our operations into the third quarter of 2025, based on certain assumptions and estimates that may prove to be inaccurate. As a result, there is substantial doubt about our ability to continue as a going concern. If we are unable to raise additional capital in the second quarter of 2025, we expect to incur material expenses and operating losses in connection with pursuing strategic alternatives, including mergers, or winding up our operations.

Previous wording

We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval of itolizumab (EQ001), or EQ101 or EQ302 if we resume development activities, or any future product candidate, which is unlikely to happen within the next 12 months, if ever. Further, under the Asset Purchase Agreement with Ono, our revenues related to itolizumab (EQ001) are limited to the upfront option fee already received and reimbursement of our development costs of itolizumab (EQ001) during the option period, which expired on October 30, 2024. Accordingly, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements. However, we may not be able to secure additional financing or enter into such other arrangements in a timely manner or on favorable terms, if at all. As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, inflationary pressures on the economy and monetary policy responses by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, reduce or terminate our research and development programs or other operations, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Current wording

We do not expect to generate any revenues from product sales unless and until we successfully resume and complete development and obtain regulatory approval for EQ504, itolizumab (EQ001), EQ302, or any future product candidate, which is unlikely to happen within the next 12 months, if ever. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements. However, we may not be able to secure additional financing or enter into such other arrangements in a timely manner or on favorable terms, if at all. As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, tariffs, inflationary pressures on the economy and monetary policy responses by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including from diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. Our failure to raise capital or enter into such other arrangements in the second quarter of 2025 will have a negative impact on our financial condition and could force us to further delay or terminate our research and development programs or other operations, grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, or wind up our operations. If we wind up our operations or otherwise enter into another strategic transaction, our investors may lose all or substantially all of their investment.

Previous wording

To date, we have not generated any revenues from therapeutic product sales, developmental milestones or royalties. For the nine months ended September 30, 2024 and 2023, our revenues were derived from development funding from Ono and recognition of deferred revenue associated with an upfront payment under the Asset Purchase Agreement. In the future, we may generate revenue from collaboration or license agreements we may enter into with respect to our product candidates, including further revenue such as development funding from the Asset Purchase Agreement through the end of the option period, as well as product sales from any approved product, which approval is unlikely to happen within the next 12 months, if ever. Our ability to generate product revenues will depend on the successful development and eventual commercialization of itolizumab (EQ001), or EQ101 or EQ302 if we resume development activities, and any future product candidates. If we fail to complete the development of itolizumab (EQ001), or EQ101 or EQ302 if we resume development activities, or any future product candidates in a timely manner, or to obtain regulatory approval for our product candidates, our ability to generate future revenue and our results of operations and financial position would be materially adversely affected.

Current wording

To date, we have not generated any revenues from therapeutic product sales, developmental milestones or royalties. In 2022, 2023 and 2024, our revenues were derived from an upfront payment under the Asset Purchase Agreement as well as from development funding from Ono. In the future, we may generate revenue from collaboration or license agreements we may enter into with respect to our product candidates, as well as product sales from any approved product, which approval is unlikely to happen within the next 12 months, if ever. Our ability to generate product revenues, if we resume development activities, will depend on the successful development and eventual commercialization of EQ504, itolizumab (EQ001), EQ302, and any future product candidates. If we fail to resume and complete the development of EQ504, itolizumab (EQ001), EQ302, or any future product candidates in a timely manner, or to obtain regulatory approval for our product candidates, our ability to generate future revenue and our results of operations and financial position would be materially adversely affected.

Previous wording

We were responsible for conducting all research and development of itolizumab, which has been funded by Ono from July 1, 2022 through the end of the option period. The option period expired and the Asset Purchase Agreement automatically terminated on October 30, 2024 pursuant to its terms.

Current wording

We were responsible for conducting all research and development of itolizumab, which was funded by Ono on a quarterly basis from July 1, 2022, through October 30, 2024, the end of the option period. On October 30, 2024, the option period expired and the Asset Purchase Agreement automatically terminated pursuant to its terms.

Previous wording

As of September 30, 2024, aggregate deferred revenue related to the Asset Purchase Agreement was $2.1 million.

Current wording

As of December 31, 2024, there was no further deferred revenue related to the Asset Purchase Agreement.

Previous wording

Research and development expenses primarily consist of costs associated with our non-clinical research and clinical development of our product candidates, as well as costs paid to contract manufacturing organizations, or CMOs, and to Biocon and its affiliates in connection with clinical product supply, formulation and device development, and the performance of CMC activities required for a potential BLA filing of itolizumab. Our research and development expenses include:

Current wording

Research and development expenses primarily consist of costs associated with our non-clinical research and clinical development of our product candidates. Our research and development expenses include:

Previous wording

external expenses related to chemistry, manufacturing, and controls, or CMC, formulation and device development, and supply of drug product; and

Current wording

external expenses related to CMC and supply of drug product; and

Previous wording

Our direct research and development expenses consist principally of external costs, such as fees paid to CROs and consultants in connection with our non-clinical research and clinical development, as well as costs paid to CMOs and to Biocon and its affiliates in connection with clinical product supply, formulation and device development, and the performance of CMC activities required for a potential BLA filing of itolizumab.

Current wording

Our direct research and development expenses consist principally of external costs, such as fees paid to CROs and consultants in connection with our non-clinical research and clinical development.

Previous wording

Equillium Australia Pty Ltd, or Equillium Australia, a wholly-owned subsidiary of Equillium, Inc., is eligible under the Australian Research and Development Tax Incentive Program, or the Tax Incentive, to obtain a cash refund from the Australian Taxation Office, or ATO, for eligible research and development expenditures. The cash refund is received by Equillium Australia, upon filing of a claim in connection with Equillium Australia’s annual income tax return. The Tax Incentive is a self-assessed program whereby Equillium Australia must assess its eligibility each year to determine (i) if the entity is eligible, (ii) if the specific research and development activities are eligible and (iii) if the individual research and development expenditures have nexus to such research and development activities. Equillium Australia evaluates its eligibility under the Tax Incentive as of each balance sheet date based on the most current and relevant data available. Equillium Australia is able to continue to claim the Tax Incentive for as long as it remains eligible and continues to incur eligible research and development expenditures. The estimated Tax Incentive refund amounts are recognized as a reduction to research and development expense when there is reasonable assurance that the Tax Incentive refund amounts will be received, the relevant expenditure has been incurred, and the amount can be reliably measured.

Current wording

Equillium Australia Pty Ltd, or Equillium Australia, a wholly-owned subsidiary of Equillium, Inc., is eligible under the Australian Research and Development Tax Incentive Program, or the Tax Incentive, to obtain a cash refund from the Australian Taxation Office, or ATO, for eligible research and development expenditures. The cash refund is received by Equillium Australia, upon filing of a claim in connection with Equillium Australia’s annual income tax return. The Tax Incentive is a self-assess program whereby Equillium Australia must assess its eligibility each year to determine (i) if the entity is eligible, (ii) if the specific research and development activities are eligible and (iii) if the individual research and development expenditures have nexus to such research and development activities. Equillium Australia evaluates its eligibility under the Tax Incentive as of each balance sheet date based on the most current and relevant data available. Equillium Australia is able to continue to claim the Tax Incentive for as long as it remains eligible and continues to incur eligible research and development expenditures. The estimated Tax Incentive refund amounts are recognized as a reduction to research and development expense when there is reasonable assurance that the Tax Incentive refund amounts will be received, the relevant expenditure has been incurred, and the amount can be reliably measured.

Previous wording

Although we have recently implemented operating changes and plan to take further action as necessary to decrease our spending and conserve cash, subject to raising additional capital, we anticipate our expenses to potentially increase substantially as we advance our research and development activities, including the ongoing and future clinical development of itolizumab (EQ001), potentially resume development activities related to EQ101 and EQ302, potentially expand the number of indications for which we are developing those product candidates, and potentially acquire or develop new product candidates. The successful development of itolizumab (EQ001), and if we resume development activities, EQ101 and EQ302, is highly uncertain. At this time, due to the inherently unpredictable nature of pre-clinical and clinical development, we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the remainder of the development of our product candidates or the period, if any, in which material net cash inflows from the sales from our product candidates may commence. Clinical development timelines, the probability of success, and development costs can differ materially from expectations.

Current wording

We plan to continue to incur substantial research and development expenses for the foreseeable future if we are able to successfully raise additional capital and resume and complete development of EQ504, itolizumab (EQ001) and EQ302, potentially expand the number of indications for which we are developing those product candidates, and potentially acquire or develop new product candidates. The successful development of EQ504, itolizumab (EQ001) and EQ302 is highly uncertain. At this time, due to the inherently unpredictable nature of preclinical and clinical development, we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the remainder of the development of our product candidates or the period, if any, in which material net cash inflows from the sales from our product candidates may commence. Clinical development timelines, the probability of success, and development costs can differ materially from expectations.

Previous wording

Completion of clinical trials may take several years or more, and the length of time generally varies according to the type, complexity, novelty, and intended use of a product candidate. The cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:

Current wording

Completion of planned or future clinical studies may take several years or more, and the length of time generally varies according to the type, complexity, novelty, and intended use of a product candidate. The cost of planned or future clinical studies may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:

Previous wording

the number of sites and the number of countries included in our clinical trials;

Current wording

the number of sites and the number of countries included in our planned or future clinical studies;

Previous wording

the inefficiencies and additional costs related to any delays and potential restarts of clinical trials;

Current wording

the inefficiencies and additional costs related to any delays and potential restarts of planned or future clinical studies;

Previous wording

the number of patients that participate in our clinical trials;

Current wording

the number of patients that participate in our planned or future clinical studies;

Previous wording

the drop-out or discontinuation rates of patients in our clinical trials;

Current wording

the drop-out or discontinuation rates of patients in our planned or future clinical studies;

Previous wording

the number and complexity of procedures, analyses and tests performed during our clinical trials;

Current wording

the number and complexity of procedures, analyses and tests performed during our planned or future clinical studies;

Previous wording

the costs of procuring drug product for our clinical trials;

Current wording

the costs of procuring drug product for our planned or future clinical studies;

Previous wording

We anticipate that our general and administrative expenses will increase in future periods, reflecting an expanding infrastructure, increased legal, audit, tax and other professional fees associated with being a public company and maintaining compliance with stock exchange listing and SEC requirements, director and officer insurance premiums associated with being a public company, and accounting and investor relations costs. In addition, if we obtain regulatory approval for any product candidate, we expect to incur expenses associated with building the infrastructure and capabilities to commercialize such product. However, the timing of any such approval is highly uncertain, and it may be several years, if ever, that we receive any such regulatory approval.

Current wording

We anticipate that our general and administrative expenses will increase in future periods, if we resume development activities of EQ504, itolizumab (EQ001) and EQ302, reflecting an expanding infrastructure, increased legal, audit, tax and other professional fees associated with being a public company and maintaining compliance with stock exchange listing and SEC requirements, director and officer insurance premiums associated with being a public company, and accounting and investor relations costs. In addition, if we obtain regulatory approval for any product candidate, we expect to incur expenses associated with building the infrastructure and capabilities to commercialize such product. However, the timing of any such approval is highly uncertain, and it may be several years, if ever, that we receive any such regulatory approval.

Previous wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Current wording

Comparison of the Three Months Ended March 31, 2025 and 2024

Previous wording

The following table sets forth our results of operations for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Current wording

The following table sets forth our results of operations for the three months ended March 31, 2025 and 2024 (in thousands):

Previous wording

Interest income was $0.3 million and $1.1 million for the three and nine months ended September 30, 2024, respectively, compared to $0.6 million and $1.8 million for the three and nine months ended September 30, 2023. The decrease was primarily due to lower average cash, cash equivalents and short-term investment balances in 2024 compared to 2023.

Current wording

Interest income was $0.2 million and $0.4 million for the three months ended March 31, 2025 and 2024, respectively. The decrease in interest income was primarily due to lower average cash, cash equivalents and short-term investment balances during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Previous wording

From inception through September 30, 2024, we have financed our operations primarily through the sale of equity and debt securities and income generated from our Asset Purchase Agreement with Ono as described in more detail in the Sources of Liquidity section below. As of September 30, 2024, we had an accumulated deficit of $188.0 million and anticipate that we will continue to incur net losses for the foreseeable future. As of September 30, 2024, we had $15.5 million in cash and cash equivalents and $10.4 million in short-term investments.

Current wording

From inception through March 31, 2025, we have financed our operations primarily through the sale of equity and debt securities and income generated from our Asset Purchase Agreement with Ono as described in more detail in the Sources of Liquidity section below. As of March 31, 2025, we had an accumulated deficit of $202.5 million and anticipate that we will continue to incur net losses for the foreseeable future. As of March 31, 2025, we had $14.5 million in cash and cash equivalents.

Previous wording

In October 2023, we entered into an at-the-market facility with Jefferies LLC, or Jefferies, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $21.95 million from time to time through Jefferies acting as our sales agent, or the 2023 ATM Facility. As of the filing of this Quarterly Report on Form 10-Q, we have not sold any shares under the 2023 ATM Facility.

Current wording

In October 2023, we entered into an at-the-market facility with Jefferies LLC, or Jefferies, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $21.95 million from time to time through Jefferies acting as our sales agent, or the 2023 ATM Facility. During the three months ended March 31, 2025, we sold an aggregate of 109,410 shares of common stock under the 2023 ATM Facility for gross proceeds of approximately $55,000. There were no shares sold under the 2023 ATM Facility from October 2023 through December 31, 2024. Issuance costs related to the 2023 ATM totaled $0.5 million inception-to-date. Since March 31, 2025 and through the date of the filing of this quarterly report on Form 10-Q, there have been no additional sales of the Company's stock under the 2023 ATM Facility.

Previous wording

Although we have recently implemented operating changes and plan to take further action as necessary to decrease our spending and conserve our cash, subject to raising additional capital, we anticipate our expenses to potentially increase substantially as we advance our research and development activities, including the ongoing and future clinical development of itolizumab (EQ001), and potentially prepare to file a BLA and launch itolizumab (EQ001), if approved. Our expenses could also increase as a result of potentially resuming development activities related to EQ101 and EQ302, and potentially advancing preclinical research of other novel drug candidates identified through our multi-cytokine targeting drug discovery platform or acquired through strategic transactions. We expect that our primary uses of capital will be for clinical development, non-clinical research, CMC activities, formulation and device development, product supply, potential acquisition of new products, potential repurchases of shares of our common stock under our stock repurchase program, legal and other regulatory compliance expenses, employee compensation and related expenses, insurance premiums, working capital and other general overhead costs. Further, with the expiration of Ono’s option, we no longer receive reimbursement from Ono for our itolizumab (EQ001) development expenses incurred after October 30, 2024, which is expected to adversely impact our near-term net cash used in operations.

Current wording

Although we have implemented operating changes and plan to take further action as necessary to decrease our spending and conserve our cash, subject to raising additional capital, we anticipate our expenses to potentially increase substantially as we advance our research and development activities, including potentially resuming development of our preclinical assets, EQ504 and EQ302, and our clinical asset, itolizumab (EQ001). We expect that our primary uses of capital will be for non-clinical research, clinical development, CMC activities, formulation development, product supply, potential acquisition of new products, legal and other regulatory compliance expenses, employee compensation and related expenses, insurance premiums, working capital and other general overhead costs.

Previous wording

Ono’s decision to let its option lapse unexercised materially impacts our funding requirements. As a result, we have evaluated a variety of different adjustments to our operating plans to preserve cash and extend our runway. While we have planned budgets for various scenarios, there can be no certainty that we have captured all potential scenarios. As a result of Ono’s decision to let its option lapse, we will need to significantly reduce our operating burn to be able to fund our operations for at least the next 12 months. We expect to achieve such savings through the aforementioned reductions to spending. In addition to significantly decreasing our spending, we are actively pursuing sources of additional capital, including potentially the 2023 ATM Facility as well as other financing sources that may be available to us. If we are unable to access our 2023 ATM Facility or otherwise raise additional capital, we may need to implement further cost cutting measures, which may require us to discontinue the development of certain of our product candidates or result in the delay of their development and commercialization, if approved.

Current wording

Our funding requirements are significant, difficult to predict, and will be challenging to resolve. As a result, we have evaluated a variety of different adjustments to our operating plans to preserve cash and extend our runway. While we have planned budgets for various scenarios, there can be no certainty that we have captured all potential scenarios.

Previous wording

We have based these estimates on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Furthermore, our operating plans may change, and we may need additional funds sooner than planned. Additionally, the process of testing product candidates in clinical studies is costly, and the timing of progress in these studies is uncertain. Because the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of itolizumab (EQ001), and EQ101 and EQ302 if we resume development activities, or any of our other product candidates or whether, or when, we may achieve profitability.

Current wording

We have based these estimates on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Furthermore, our operating plans may change, and we may need additional funds sooner than planned. Additionally, the process of testing product candidates in clinical studies is costly, and the timing of progress in these studies is uncertain. Because the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully resume and complete the development and commercialization of EQ504, itolizumab (EQ001) and EQ302, or any of our other product candidates or whether, or when, we may achieve profitability.

Previous wording

the initiation, progress, timing, costs and results of our ongoing and future clinical studies of itolizumab (EQ001), and EQ101 if we resume development activities, and other product candidates, including as such activities may be adversely impacted by public health epidemics or outbreaks, the evolving conflict between Russia and Ukraine, the conflict in the Middle East, and recent bank failures;

Current wording

the initiation, progress, timing, costs and results, if we resume development activities, of our planned or future non-clinical and clinical studies of EQ504, itolizumab (EQ001), EQ302 and other future product candidates, including as such activities may be adversely impacted by public health epidemics or outbreaks, the evolving conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, tariffs and inflationary pressures on the economy;

Previous wording

the potential advancement and cost of preclinical research of EQ302, if we resume development activities of EQ302, and other novel preclinical drug candidates;

Current wording

the advancement and cost of preclinical research, if we resume development activities, of EQ504, EQ302 and other novel preclinical drug candidates;

Previous wording

the cost, timing and outcome of regulatory review of any BLA or New Drug Application, or NDA, we may submit for our product candidates;

Current wording

the cost, timing and outcome of regulatory review of any Biologics License Application, or BLA, or New Drug Application, or NDA, we may submit for our product candidates;

Previous wording

the costs and timing of manufacturing itolizumab (EQ001) and other product candidates;

Current wording

the costs and timing of manufacturing EQ504, itolizumab (EQ001) and other product candidates;

Previous wording

the cost associated with commercializing itoluzmab (EQ001) or any of our other product candidates, if approved for commercial sale.

Current wording

the cost associated with commercializing EQ504, itolizumab (EQ001) or any of our other product candidates, if approved for commercial sale.

Previous wording

Until such time as we can generate substantial product revenues, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements. The sale of additional equity or convertible debt could result in additional dilution to our stockholders and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. The incurrence of debt financing would result in debt service obligations and the governing documents would likely include operating and financing covenants that would restrict our operations. As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, inflationary pressures on the economy and monetary policy responses taken by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. If we raise additional funds through collaboration or license agreements, 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 and/or that may reduce the value of our common stock. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or other operations. Any of these actions could have a material effect on our business, financial condition and results of operations. We have experienced net losses and negative cash flows from operating activities since our inception and expect to continue to incur net losses into the foreseeable future. We had an accumulated deficit of $188.0 million as of September 30, 2024. We expect operating losses and negative cash flows to continue for at least the next several years as we incur costs related to the development of itolizumab (EQ001), and EQ101 and EQ302 if we resume development activities, and any of our other product candidates.

Current wording

Until such time as we can generate substantial product revenues, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements. The sale of additional equity or convertible debt could result in additional dilution to our stockholders and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. The incurrence of debt financing would result in debt service obligations and the governing documents would likely include operating and financing covenants that would restrict our operations. As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, tariffs, inflationary pressures on the economy and monetary policy responses taken by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. If we raise additional funds through collaboration or license agreements, 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 and/or that may reduce the value of our common stock. If we are unable to raise capital during the second quarter of 2025, we would be forced to further delay or eliminate our research and development programs or other operations. Further, if we are unable to timely secure additional capital, we will need to pursue strategic alternatives, including mergers, or wind up the company’s operations entirely. Any of these actions could have a material effect on our business, financial condition and results of operations. We have experienced net losses and negative cash flows from operating activities since our inception and expect to continue to incur net losses into the foreseeable future. We had an accumulated deficit of $202.5 million as of March 31, 2025. If we are able to raise additional capital and resume development activities, we expect operating losses and negative cash flows to continue for at least the next several years as we incur costs related to the development of EQ504, itolizumab (EQ001), EQ302 and any of our other product candidates.

Previous wording

Our expected material cash requirements are comprised of contractually obligated expenditures, including amounts due under our operating leases. For additional information relating to our leases, see Note 7 of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. We have no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase order basis. Our expected material cash requirements do not include potential contingent payments upon the achievement by us of regulatory and commercial milestones that we may be required to make under the terms of the merger agreement pursuant to which we acquired Bioniz, nor do they include potential contingent payments upon the achievement by us of regulatory and commercial milestones or royalty payments that we may be required to make under license agreements we have entered into or may enter into with various entities pursuant to which we have in-licensed certain intellectual property, including the Biocon License. For further details on the potential contingent payments related to our acquisition of Bioniz and related to the Biocon License, see Notes 5 and 8 of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Current wording

Our expected material cash requirements are comprised of contractually obligated expenditures, including amounts due under our operating leases. For additional information relating to our leases, see Note 7 of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. We have no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase order basis. Our expected material cash requirements do not include potential contingent payments upon the achievement by us of regulatory and commercial milestones that we may be required to make under the terms of the merger agreement pursuant to which we acquired Bioniz or potential contingent payments upon the achievement by us of regulatory milestones that we may be required to make under the terms of our stock purchase agreement with Ariagen, nor do they include potential contingent payments upon the achievement by us of regulatory and commercial milestones or royalty payments that we may be required to make under license agreements we have entered into or may enter into with various entities pursuant to which we have in-licensed certain intellectual property, including the Biocon License.

Previous wording

During the nine months ended September 30, 2024, cash used in operating activities was $15.7 million compared to $16.1 million during the nine months ended September 30, 2023. Cash used in operating activities during the nine months ended September 30, 2024 primarily related to our net loss of $2.3 million, adjusted for non-cash items of $2.2 million, primarily consisting of non-cash stock-based compensation expenses, and net cash outflows from changes in deferred revenue and other operating assets and liabilities of $15.6 million. Cash used in operating activities during the nine months ended September 30, 2023 primarily related to our net loss of $11.0 million, adjusted for non-cash items of $2.9 million, primarily consisting of non-cash stock-based compensation expenses, and net cash outflows from changes in deferred revenue and other operating assets and liabilities of $8.0 million.

Current wording

During the three months ended March 31, 2025, cash used in operating activities was $8.2 million compared to $8.8 million during the three months ended March 31, 2024. Cash used in operating activities during the three months ended March 31, 2025 primarily related to our net loss of $8.7 million, adjusted for non-cash items of $0.6 million, primarily consisting of non-cash stock-based compensation expenses, and net cash outflows from changes in other operating assets and liabilities of $0.1 million. Cash used in operating activities during three months ended March 31, 2024 primarily related to our net loss of $2.7 million, adjusted for non-cash items of $1.1 million, primarily consisting of non-cash stock-based compensation expenses, and net cash outflows from changes in deferred revenue and other operating assets and liabilities of $7.2 million.

Previous wording

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, and similarly did not and do not have any holdings in variable interest entities. We do have certain contingent consideration liabilities in the form of potential milestone payments that are included in our Biocon License and in our merger agreement with Bioniz which are not reflected in our balance sheet. However, based on our current operating plans and our assessment of the probability and potential timing of such payments, we believe those payments, if any, are remote and highly unlikely to come due within the next 12 months.

Current wording

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, and similarly did not and do not have any holdings in variable interest entities. We do have certain contingent consideration liabilities in the form of potential milestone payments that are included in our Biocon License, in our merger agreement with Bioniz and our stock purchase agreement with Ariagen which are not reflected in our balance sheet. However, based on our current operating plans and our assessment of the probability and potential timing of such payments, we believe those payments, if any, are remote and highly unlikely to come due within the next 12 months.