Septerna, Inc.

Previous wording

We expect to continue to incur significant and increasing net operating losses for the next several years as we:

Current wording

We expect to continue to incur significant and increasing expenditures for the next several years as we:

Previous wording

continue to operate as a public company, including expenses related to compliance with the rules and regulations of the SEC and those of any national securities exchange on which our securities are traded, legal, auditing, additional insurance expenses, investor relations activities, and other administrative and professional services;

Current wording

continue to operate as a public company, including expenses related to compliance with the rules and regulations of the SEC and those of any national securities exchange on which our securities are traded, legal, auditing, insurance expenses, investor relations activities, and other administrative and professional services;

Previous wording

require the manufacture of supplies for our preclinical studies and clinical trials;

Current wording

manufacture supplies for our preclinical studies and clinical trials;

Previous wording

Our net losses may fluctuate significantly from period to period, depending upon the timing of our expenditures on research and development activities. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our accounts payable and accrued expenses and other current liabilities, which includes accrued research and development, in the statements of cash flows in our audited and unaudited interim condensed financial statements included elsewhere in this Quarterly Report.

Current wording

Our net losses may fluctuate significantly from period to period, depending upon the timing of our expenditures on research and development activities. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our accounts payable and accrued expenses and other current liabilities, which includes accrued research and development, in the statements of cash flows in our audited and unaudited interim condensed financial statements included elsewhere in the Quarterly Report. Our net loss was $46.3 million and $30.6 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, we had an accumulated deficit of $164.7 million.

Previous wording

We historically financed our operations primarily through the issuances of convertible promissory notes and convertible preferred stock, and, most recently, through an initial public offering (“IPO”). In October 2024, we completed our IPO, pursuant to which we issued and sold an aggregate of 18.4 million shares of our common stock (inclusive of an additional 2.4 million shares of our common stock issued and sold pursuant to the underwriters' exercise of their option to purchase additional shares in full). The aggregate net proceeds received by us from the IPO was $302.8 million, net of total offering costs of $28.4 million.

Current wording

We have historically financed our operations primarily through the issuances of convertible promissory notes and convertible preferred stock, and, most recently, through an initial public offering (“IPO”). In October 2024, we completed our IPO, pursuant to which we issued and sold an aggregate of 18.4 million shares of our common stock (inclusive of an additional 2.4 million shares of our common stock issued and sold pursuant to the underwriters' exercise of their option to purchase additional shares in full). The aggregate net proceeds received by us from the IPO was $302.8 million, net of total offering costs of $28.4 million.

Previous wording

We conduct research and manufacturing work outside of the United States, including China, that may be affected by tariffs, including tariffs that have been or may in the future be imposed by the United States or other countries through reciprocal tariffs. While we do not currently believe tariffs will have a material impact on our business or results of operations, we will continue to carefully monitor the situation.

Current wording

We conduct research and manufacturing work outside of the U. S., including China, that may be affected by tariffs, including tariffs that have been or may in the future be imposed by the U.S. or other countries through reciprocal tariffs. While we do not currently believe tariffs will have a material impact on our business or results of operations, we will continue to carefully monitor the situation.

Previous wording

On May 13, 2025, we entered into a global Collaboration and License Agreement (the “Collaboration Agreement”) with Novo Nordisk A/S (“Novo”). Under the Collaboration Agreement, we and Novo will exclusively collaborate to leverage our proprietary Native Complex Platform™ to discover, develop and commercialize multiple potential oral small molecule therapies for metabolic-related diseases based on certain specified molecular targets. The collaboration objective is to discover and develop several novel mono-, dual-, or triple-acting oral small molecule drug candidates directed across five GPCRs, including the GLP-1, GIP, and glucagon receptors (the “Collaboration Targets”). The collaboration includes our most advanced preclinical metabolic program focused on developing an oral small molecule agonist to the GIP receptor. We and Novo will initially commence four simultaneous research and development programs (each an “R&D Program”) with each pursuing one or more Collaboration Targets from discovery through development candidate selection.

Current wording

In May 2025, we entered into a global Collaboration and License Agreement with Novo Nordisk A/S (“Novo”) (the “Novo Collaboration Agreement”). Under the Novo Collaboration Agreement, we and Novo are exclusively collaborating to leverage our proprietary Native Complex Platform™ to discover, develop and commercialize multiple potential oral small molecule therapies for metabolic-related diseases based on certain specified molecular targets. The collaboration objective is to discover and develop several novel mono-, dual-, or triple-acting oral small molecule drug candidates directed across five GPCRs, including the GLP-1, GIP, and glucagon receptors (the “Collaboration Targets”). The collaboration includes our most advanced preclinical metabolic program focused on developing an oral small molecule agonist to the GIP receptor. We and Novo have initially commenced four simultaneous research and development programs (each an “R&D Program”) with each pursuing one or more Collaboration Targets from discovery through development candidate selection.

Previous wording

The Collaboration Agreement includes potential payments to us exceeding $2.2 billion. Novo will pay us a one-time, non-refundable upfront payment of $195.0 million. For each R&D Program, we are also eligible to receive approximately $500.0 million in research, development, regulatory, and commercial milestone payments. In addition, we are entitled to escalating, tiered royalties ranging from mid-to-high single-digits based on global product sales on a country-by-country and product-by-product basis with respect to a R&D Program until the later of ten years after the date of first commercial sale of the first product in such R&D Program in such country, expiration of specified patent rights covering such product in such country or the expiration of specified regulatory exclusivity for the first product in such R&D Program in such country. See Note 11 to the condensed financial statements included elsewhere in this Quarterly Report for additional information.

Current wording

In July 2025, following the receipt of the antitrust clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the Novo Collaboration Agreement became effective and, subsequently, we received a one-time, non-refundable upfront payment of $195.0 million. For each R&D Program, we are also eligible to receive up to approximately $498.0 million in research, development, regulatory, and commercial milestone payments. In addition, we are entitled to escalating, tiered royalties ranging from mid-to-high single-digits based on global product sales on a country-by-country and product-by-product basis with respect to a R&D Program until the later of ten years after the date of first commercial sale of the first product in such R&D Program in such country, expiration of specified patent rights covering such product in such country or the expiration of specified regulatory exclusivity for the first product in such R&D Program in such country. See Note 3 to the condensed financial statements included elsewhere in this Quarterly Report for additional information.

Previous wording

In September 2023, we entered into an asset purchase agreement with Vertex Pharmaceuticals Incorporated (“Vertex”) under which Vertex acquired all of our IPR&D asset related to a GPCR program. The transfer of the IPR&D asset to Vertex was completed in November 2023.

Current wording

In September 2023, we entered into an asset purchase agreement with Vertex Pharmaceuticals Incorporated (“Vertex”) under which Vertex acquired an IPR&D asset related to a GPCR program, including all intellectual property, materials, and compounds associated with the program (“Vertex Asset Purchase Agreement”). The Vertex Asset Purchase Agreement also provides for a potential milestone payment payable to us contingent upon the achievement of a milestone event. As of June 30, 2025, the variable consideration related to this milestone payment was determined to be improbable of receipt.

Previous wording

At the same time in September 2023, we entered into a research service agreement with Vertex under which we agreed to perform certain exploratory research activities for Vertex. See the subsection titled“—Service Agreement” below.

Current wording

In conjunction with the Vertex Asset Purchase Agreement, we entered into a research service agreement with Vertex under which we agreed to perform certain exploratory research activities for Vertex (“Vertex Research Service Agreement”).

Previous wording

In addition to the Vertex purchase agreement, we also entered into a research service agreement with Vertex (“Vertex service agreement”) under which we agreed to perform certain exploratory research activities for Vertex. The Vertex service agreement is for a two-year term, however, Vertex has the ability to terminate the agreement with a 30-day notice at any time. As a result, we concluded that the contract duration is 30 days, representing a month-to-month service contract. We recognize revenue associated with the Vertex service agreement over the performance period of the research services as the services are provided.

Current wording

The Vertex Research Service Agreement is for a two-year term; however, Vertex has the ability to terminate the agreement with a 30-day notice at any time. As a result, we concluded that the contract duration is 30 days, representing a month-to-month service contract. We recognize revenue associated with the Vertex Research Service Agreement over the performance period of the research services as the services are provided.

Previous wording

We are subject to corporate United States federal and state income taxation. Our benefit for income taxes is recorded in accordance with Accounting Standard Codification 740, Accounting for Income Taxes, which provides for deferred taxes using an asset and liability approach. We establish a valuation allowance against all of our net deferred tax assets. We consider all available evidence, both positive and negative, including but not limited to our historical operating results, income or loss in recent periods, cumulative losses in recent years, forecasted earnings (losses), future taxable income (loss), and significant risk and uncertainty related to forecasts, and concluded the deferred tax assets are not more likely than not to be realized.

Current wording

We are subject to corporate U. S. federal and state income taxation. Our benefit for income taxes is recorded in accordance with Accounting Standard Codification 740, Accounting for Income Taxes, which provides for deferred taxes using an asset and liability approach. We establish a valuation allowance against all of our net deferred tax assets. We consider all available evidence, both positive and negative, including but not limited to our historical operating results, income or loss in recent periods, cumulative losses in recent years, forecasted earnings (losses), future taxable income (loss), and significant risk and uncertainty related to forecasts, and concluded the deferred tax assets are not more likely than not to be realized.

Previous wording

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

Current wording

Comparison of the Three and Six Months Ended June 30, 2025 and 2024

Previous wording

Our service revenue of $0.2 million and $0.3 million for the three months ended March 31, 2025 and 2024, respectively, was generated from research activities performed for Vertex in connection with the Vertex service agreement.

Current wording

We recorded service revenue of $0.1 million and $0.4 million for the three months ended June 30, 2025 and 2024, respectively. We recorded service revenue of $0.3 million and $0.7 million for the six months ended June 30, 2025 and 2024, respectively. Our service revenue was generated from research activities performed for Vertex in connection with the Vertex Research Service Agreement.

Previous wording

Research and development expenses were $19.3 million and $13.2 million for the three months ended March 31, 2025 and 2024, respectively. The increase was primarily due to (i) $5.8 million of higher direct costs associated with our clinical and preclinical and research programs, including $1.7 million of clinical trial expenses, (ii) $1.7 million of higher employee-related costs as a result of increased headcount as we grow our business, and (iii) $0.8 million of higher facility-related and office costs as we expanded our office space to accommodate higher occupancy and larger operational activities, partially offset by (i) $1.8 million of lower expenses attributable to unallocated external research and development costs and (ii) a decrease of $0.4 million in other research and development expense.

Current wording

Research and development expenses were $41.5 million and $28.2 million for the six months ended June 30, 2025 and 2024, respectively. The increase was primarily due to (i) $12.7 million of higher direct costs associated with our clinical and preclinical and research programs, including $1.6 million of higher clinical trial expenses, (ii) $3.8 million of higher employee-related costs as a result of increased headcount as we continue to grow our business, and (iii) $1.5 million of higher facility-related and office costs as we expanded our office space in July 2024 to accommodate higher occupancy and larger operational activities, partially offset by $4.0 million of lower expenses attributable to unallocated external research and development costs and $0.8 million of lower other research and development expense.

Previous wording

The SEP-786 clinical study was discontinued in February 2025 and we do not anticipate incurring significant additional clinical trial costs associated with that study. We expect to continue to incur increased research and development expenses as we advance next-generation oral small molecule PTH1R agonists from our PTH1R program toward clinical development, advance SEP-631 (MRGPRX2) into clinical development, and continue to advance other programs in our pipeline.

Current wording

In February 2025, the SEP-786 clinical study was discontinued and, as a result, we do not anticipate incurring significant additional clinical trial costs associated with this study. We expect to continue to incur increased research and development expenses as we advance SEP-631 (MRGPRX2) into clinical development and continue to advance next-generation oral small molecule PTH1R agonists from our PTH1R program and other programs in our pipeline toward clinical development.

Previous wording

General and administrative expenses were $6.9 million and $2.7 million for the three months ended March 31, 2025 and 2024, respectively. The increase was primarily due to (i) $2.0 million of higher legal and consulting fees, mainly attributable to costs associated with becoming a public company and ongoing operations as a public company following our IPO in October 2024, (ii) $1.5 million of higher employee-related costs as a result of increased headcount to support our growing operations, and (iii) $0.4 million of higher IT operational expenses.

Current wording

General and administrative expenses were $6.9 million and $3.4 million for the three months ended June 30, 2025 and 2024, respectively. The increase was primarily due to (i) $1.5 million of higher employee-related costs as a result of increased headcount to support our growing operations, (ii) $1.3 million of higher legal and consulting fees mainly attributable to costs associated with operating as a public company following our IPO in October 2024, (iii) $0.4 million of higher IT-related expenses, and (iv) $0.2 million of higher facility-related and office costs as we expanded our office space in July 2024 to accommodate higher occupancy and larger operational activities.

Previous wording

Interest income was $4.5 million and $1.3 million for the three months ended March 31, 2025 and 2024, respectively. The increase was due to higher interest rates and higher balances of invested cash in cash equivalents and marketable securities.

Current wording

Interest income was $4.2 million and $1.5 million for the three months ended June 30, 2025 and 2024, respectively. Interest income was $8.6 million and $2.8 million for the six months ended June 30, 2025 and 2024, respectively. The increases in interest income for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, respectively, were due to higher interest rates and higher balances of invested cash in cash equivalents and marketable securities.

Previous wording

We recognized $0.1 million of benefit for income taxes for the three months ended March 31, 2024. We did not record any benefit or provision for income taxes for the three months ended March 31, 2025.

Current wording

We recognized $0.1 million and $0.2 million of benefit for income taxes for the three and six months ended June 30, 2024, respectively. We did not record any benefit or provision for income taxes for the three and six months ended June 30, 2025.

Previous wording

We historically financed our operations primarily through the issuances of convertible promissory notes and convertible preferred stock, and most recently, through an IPO. In October 2024, we completed our IPO, pursuant to which we issued and sold an aggregate of 18.4 million shares of common stock (inclusive of 2.4 million shares of common stock sold pursuant to the underwriters' exercise of their option to purchase additional shares in full). The aggregate net proceeds received by us from the IPO was $302.8 million, net of total offering costs of $28.4 million. As of March 31, 2025, we had $398.2 million in cash, cash equivalents, and marketable securities.

Current wording

We historically financed our operations primarily through the issuances of convertible promissory notes and convertible preferred stock, and most recently, through an IPO. In October 2024, we completed our IPO, pursuant to which we issued and sold an aggregate of 18.4 million shares of common stock (inclusive of 2.4 million shares of common stock sold pursuant to the underwriters' exercise of their option to purchase additional shares in full). The aggregate net proceeds received by us from the IPO was $302.8 million, net of total offering costs of $28.4 million.

Previous wording

Net cash used in operating activities was $23.3 million and $16.7 million for the three months ended March 31, 2025 and 2024, respectively. The net cash used in operating activities for the three months ended March 31, 2025 was due to our net loss of $21.5 million and a $3.3 million of net change in operating assets and liabilities, partially offset by $1.4 million of non-cash charges for depreciation and amortization, stock-based compensation, non-cash operating lease expense, deferred income tax and accretion of discounts, net, on marketable securities.

Current wording

Net cash used in operating activities was $43.6 million and $29.7 million for the six months ended June 30, 2025 and 2024, respectively. The net cash used in operating activities for the six months ended June 30, 2025 was due to our net loss of $46.3 million and a $0.5 million of net change in operating assets and liabilities, partially offset by $3.2 million of non-cash charges for depreciation and amortization, stock-based compensation, non-cash operating lease expense, and accretion of discounts, net, on marketable securities.

Previous wording

The net cash used in operating activities for the three months ended March 31, 2024 was due to our net loss of $14.2 million and $3.5 million of net change in operating assets and liabilities, partially offset by $1.0 million of non-cash charges for depreciation and amortization, stock-based compensation and non-cash operating lease expense.

Current wording

The net cash used in operating activities for the six months ended June 30, 2024 was due to our net loss of $30.6 million and $1.0 million of net change in operating assets and liabilities, partially offset by $1.9 million of non-cash charges for depreciation and amortization, stock-based compensation, non-cash operating lease expense, deferred income tax and accretion of discounts, net, on marketable securities.

Previous wording

Net cash used in investing activities of $4.9 million for the three months ended March 31, 2025 was due to $49.7 million of purchases of marketable securities and $0.4 million of purchases of property and equipment, partially offset by the maturity of $45.2 million of marketable securities.

Current wording

Net cash used in investing activities of $5.7 million for the six months ended June 30, 2025 was attributable to $113.6 million of purchases of marketable securities and $0.4 million of purchases of property and equipment, partially offset by the maturity of $108.3 million of marketable securities.

Previous wording

Net cash provided by investing activities of $9.6 million for the three months ended March 31, 2024 was due to $22.6 million proceeds from the sale of non-financial asset, partially offset by the purchase of $12.3 million of marketable securities and $0.7 million of purchases of property and equipment.

Current wording

Net cash used in investing activities of $2.6 million for the six months ended June 30, 2024 was attributable to $32.2 million of purchases of available-for-sale marketable securities and $0.9 million of purchases of property and equipment, partially offset by the receipt of the remaining $22.6 million from the sale of non-financial asset during the year ended December 31, 2023 and the maturity of $7.9 million of available-for-sale marketable securities.

Previous wording

our ability to maintain collaborations or strategic relationships and the extent to which we identify and enter into future collaborations or other arrangements with additional third parties in order to further develop our product candidates;

Current wording

our ability to maintain existing collaborations or strategic relationships and the extent to which we identify and enter into future collaborations or other arrangements with additional third parties in order to further develop our product candidates, as well as our ability to realize the intended and potential benefits of such agreements and collaborations;

Previous wording

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect existing stockholders’ rights as common stockholders. 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.

Current wording

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of private and public equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect existing stockholders’ rights as common stockholders. 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.

Previous wording

Management’s discussion and analysis of our financial condition and results of operations is based on our condensed financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Current wording

Management’s discussion and analysis of our financial condition and results of operations is based on our condensed financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”). The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Previous wording

During the three months ended March 31, 2025, there have been no material changes to our critical accounting policies and estimates as described in our Annual Report.

Current wording

During the six months ended June 30, 2025, there have been no material changes to our critical accounting policies and estimates as described in our Annual Report.