Septerna, Inc.

Note 1. Organization and Basis of Presentation

Description of the Business

Septerna, Inc. (“Septerna” or the “Company”) is a biotechnology company pioneering a new era of G protein-coupled receptor (“GPCR”) oral small molecule drug discovery powered by its proprietary Native Complex Platform™. The Company’s industrial-scale platform aims to unlock the full potential of GPCR therapies and has led to the discovery and development of its deep pipeline of product candidates focused on treating patients in three therapeutic areas: endocrinology, immunology and inflammation, and metabolic diseases.

The Company’s proprietary Native Complex Platform™ replicates the natural structure, function, and dynamics of GPCRs outside of cells at an industrial scale. The Company’s foundational technologies enable it to isolate, purify, and reconstitute full-length, properly folded GPCR proteins within ternary complexes with ligands and transducer proteins in a lipid bilayer that mimics the cell membrane. The Company then applies state-of-the-art discovery tools and technologies to these defined and tunable protein complexes to structurally design, screen for, and optimize potential product candidates. Leveraging its platform, the Company has transformed GPCR oral small molecule drug discovery to an industrialized and iterative structure-based drug design approach to expand the landscape of druggable GPCR targets with novel oral small molecule medicines for patients. The Company’s Native Complex Platform™ is designed to enable it to target certain GPCRs for the first time, uncover novel binding pockets for validated receptors, and pursue a wide spectrum of pharmacologies, including agonists, antagonists, and allosteric modulators, to affect GPCR signaling in different ways to achieve desired therapeutic effects.

The Company was incorporated in Delaware in December 2019, under the name GPCR NewCo, Inc. In June 2021, the Company changed its name to Septerna, Inc. The Company is headquartered in South San Francisco, California.

Reverse Stock Split

On October 18, 2024, the Company effected a 1-for-8.6103 reverse stock split of its issued and outstanding shares of common stock. Upon the effectiveness of the reverse stock split, (i) all shares of outstanding common stock were adjusted; (ii) the conversion ratio of the convertible preferred stock was adjusted; (iii) the number of shares of common stock for which each outstanding option to purchase common stock is exercisable were adjusted; and (iv) the exercise price of each outstanding option to purchase common stock was adjusted. All of the outstanding common stock (including shares of common stock subject to the Company’s options and as converted for the outstanding convertible preferred stock), share prices, exercise prices and per share amounts contained in the condensed financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented. The par value per share and the authorized number of shares of common stock and preferred stock were not adjusted as a result of the reverse stock split. The number of authorized shares did not change.

Initial Public Offering

In October 2024, the Company completed its initial public offering (“IPO”), pursuant to which it issued and sold an aggregate of 18.4 million shares of its common stock at the IPO price of $18.00 per share, including 2.4 million shares that were issued to the underwriters pursuant to the full exercise of their option to purchase additional shares, resulting in net proceeds of $302.8 million, net of total offering costs of $28.4 million. Immediately prior to the closing of the IPO, the Company’s then outstanding convertible preferred stock automatically converted into 22,839,774 shares of common stock.

Following the closing of the IPO, no shares of convertible preferred stock were authorized or outstanding. In connection with the completion of the IPO, on October 28, 2024, the Company’s certificate of incorporation was amended and restated to (i) authorize 500.0 million shares of common stock, par value $0.001 per share, which eliminates all references to the previously existing series of convertible preferred stock; and (ii) authorize 10.0 million shares of undesignated preferred stock, par value $0.001 per share, that may be issued from time to time by the Company’s board of directors in one or more series.

Liquidity and Capital Resources

The accompanying unaudited condensed financial statements have been prepared assuming the Company will continue as a going concern, which assumes that the Company will realize its assets and satisfies its liabilities in the normal course of business. The Company is subject to risks inherent in operating an early-stage biotechnology business. These risks include, but are not limited to, dependence on the development of marketable products, the ability to attract, retain, and motivate qualified personnel, rapid technological changes and the rapidly evolving nature of the biotechnology industry.

The Company has incurred significant losses and negative cash flows from operations since its inception and expects to incur losses as a result of its continued research and development activities. To date, none of the Company’s product candidates have been approved by the U.S. Food and Drug Administration (the “FDA”) for commercial sale and, therefore, the Company has not generated any revenue from product sales.

The Company historically financed its operations primarily through the issuance of convertible promissory notes, convertible preferred stock, and most recently, through the sale of its common stock in an IPO. The Company will need additional financing to support its continuing operations and pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through equity offerings, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. The Company may not be able to obtain funding on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders.

For the six months ended June 30, 2025 and 2024, the Company incurred net losses of$46.3 million and$30.6 million, respectively. The Company had an accumulated deficit of$164.7 million as of June 30, 2025. The Company believes its cash, cash equivalents, and marketable securities of$379.2 million as of June 30, 2025 will be sufficient to fund its operations for, at least, 12 months from the date of issuance of the unaudited condensed financial statements.

Basis of Presentation

The accompanying unaudited interim condensed financial statements have been prepared in conformity with generally accepted accounting principles in the U.S. (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of the unaudited interim condensed financial statements for the periods presented have been included. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification and Accounting Standards Updates (“ASUs”), of the Financial Accounting Standards Board (“FASB”). The interim condensed financial statements are unaudited. The operating results presented in these unaudited interim condensed financial statements are not necessarily indicative of the results that may be expected for the full year or for any other future annual or interim period. Actual results could differ materially from estimates and assumptions. As appropriate, the Company assesses estimates each period and updates them to reflect current information, and generally reflect any changes in estimates in the period first identified.

The balance sheet data at December 31, 2024 was derived from the audited financial statements included in Septerna’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on March 27, 2025. These interim unaudited condensed financial statements should be read in conjunction with the audited financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Significant Accounting Policies

During the six months ended June 30, 2025, there were no changes to the Company’s significant accounting policies as described in Note 2 of the audited financial statements for the year ended December 31, 2024.

Accounting Pronouncements Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB, under its Accounting Standards Codification (“ASC”) or other standard setting bodies, and adopted by the Company as of the specified date.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, an accounting standard update that requires the Company to disclose more detailed information about the types of expenses (including employee compensation, depreciation, and amortization) included in each relevant income statement expense caption. In January 2025, the FASB issued ASU 2025-0, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date", to clarify the effective date of ASU 2024-03. These amendments are effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that these updates will have on its disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The standard is intended to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendmentsto improve the effectiveness of income tax disclosures. The ASU is effective for fiscal years beginning after December 15, 2024, on a prospective basis. Early adoption and retrospective reporting are permitted. The Company is currently evaluating the impact of ASU 2023-09 on its interim condensed financial statements.

Note 2. Balance Sheet Components

Restricted Cash

Restricted cash is comprised of cash that is restricted as to withdrawal or use under the terms of certain contractual agreements. In connection with the Company’s lease agreement, the Company is required to maintain a collateral account to secure a letter of credit issued to its landlord. The collateral account is classified as restricted cash on the Company’s condensed balance sheets.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

Property and Equipment, Net

Property and equipment, net consist of the following (in thousands):

Depreciation and amortization expense was $0.4 million and $0.8 million for thethree and six months ended June 30, 2025, respectively. Depreciation and amortization expense was $0.3 million and $0.6 million for thethree and six months ended June 30, 2024 respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

Note 3. Collaboration and Research Service Arrangements

Novo Collaboration Agreement

On May 13, 2025, the Company entered into a Collaboration and License Agreement with Novo Nordisk A/S (“Novo”) (the “Novo Collaboration Agreement”). Under the Novo Collaboration Agreement, the Company and Novo are exclusively collaborating to leverage the Company’s 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 Company and Novo have initially commenced four simultaneous research and development programs (each an “R&D Program”) with each pursuing one or more Collaboration Targets (as defined in the Novo Collaboration Agreement) from discovery through development candidate selection. Beginning with investigational new drug-enabling activities, Novo will then be responsible for all further global development and commercialization for each product candidate at its sole cost and expense. Novo will reimburse the Company for 100% of the fully burdened costs arising from all research and development activities undertaken by the Company under the Novo Collaboration Agreement. Novo is also responsible for all commercialization costs subject to the Company’s profit share option described below for up to one program under the Novo Collaboration Agreement. Pursuant to the terms of the Novo Collaboration Agreement, the Company will provide Novo with exclusive licenses to enable Novo to develop and commercialize products directed at the Collaboration Targets. The Company retains all other rights to its Native Complex Platform™ and all of the Company’s other research and development programs.

The Novo Collaboration Agreement became effective on July 1, 2025, following the receipt of the antitrust clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Company subsequently received a one-time, non-refundable upfront payment of $195.0 million in July 2025. The Company is also eligible to receive up to $498.0 million in research, development, regulatory, and commercial milestone payments for each R&D Program. In addition, the Company is 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. The Company is currently in the process of assessing the accounting for the Novo Collaboration Agreement.

Unless earlier terminated, the term of the Novo Collaboration Agreement continues until expiration of the last royalty term for the applicable product in the applicable country. The Novo Collaboration Agreement is subject to customary termination provisions, including termination by a party for the other party’s uncured, material breach. The Novo Collaboration Agreement also includes customary representations and warranties, covenants and indemnification obligations.

Vertex Asset Purchase and Research Service Agreement

Vertex Asset Purchase Agreement

In September 2023, the Company 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 (the “Vertex Asset Purchase Agreement”). The Vertex Asset Purchase Agreement also provides for a potential milestone payment payable to the Company 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.

In July 2025, this milestone event was determined to have been achieved and, as a result, the Company received a payment of $12.5 million in August 2025. After this milestone payment, the Company will not receive any other payments related to this IPR&D asset.

Vertex Research Service Agreement

In conjunction with the Vertex Asset Purchase Agreement, the Company entered into research service agreement with Vertex (the "Vertex Research Service Agreement"). The Company recognizes service revenue associated with the Vertex Research Service Agreement over the performance period of the research services as the services are provided in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”).

During the three and six months ended June 30, 2025, the Company recorded service revenue of$0.1 million and$0.3 million, respectively, related to research activities performed in connection with the Vertex Research Service Agreement. During the three and six months ended June 30, 2024, the Company recorded service revenue of $0.4 million and $0.7 million, respectively, related to research activities performed in connection with the Vertex Research Service Agreement.

As of June 30, 2025 and December 31, 2024, the Company’s accounts receivable was entirely attributed to Vertex. As of June 30, 2025 and December 31, 2024, no allowance for credit loss was recorded related to accounts receivable.

Note 4. Marketable Securities and Fair Value Measurements

The Company records marketable securities and cash equivalents at their estimated fair values, which are based on market prices from a variety of industry standard data providers and generally represent quoted prices for similar assets in active markets or have been derived from observable market data.

Fair value is determined based on a three-tier hierarchy under the authoritative guidance for fair value measurements and disclosures that prioritizes the inputs used in measuring fair value as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurements and unobservable (i.e., supported by little or no market activity).

Money market funds are highly liquid investments and are classified as Level 1. The pricing information for these assets is readily available and can be independently validated as of the measurement date. Marketable securities, including U.S. Treasury securities, U.S. government agency securities, commercial paper, and corporate debt securities, are classified as Level 2. These securities are valued using fair value from third-party pricing services, which may use observable inputs based on real-time trade data for similar assets, broker/dealer quotes, bids and/or offers and other observable inputs.

The carrying amounts of the Company’s prepaid and other current assets, accounts payable, and accrued and other current liabilities approximate fair value due to their short maturities.

The fair value measurements of the Company’s cash equivalents and marketable securities are identified at the following levels within the fair value hierarchy (in thousands):

Marketable Securities

As of June 30, 2025 and December 31, 2024, the Company’s marketable securities consist of debt securities, including U.S. Treasury and agency securities, corporate debt securities and commercial paper. These marketable securities are carried at fair value and are included in the tables above. The Company records an allowance for credit losses when unrealized losses are due to credit-related factors. At each reporting date, the Company evaluates securities with unrealized losses to determine whether such losses, if any, are due to credit-related factors. The Company evaluates, among others, whether the Company has the intention to sell any of these marketable securities and whether it is not more likely than not that the Company will be required to sell any of them before recovery of the amortized cost basis. Neither of these criteria were met at June 30, 2025 or December 31, 2024. The credit ratings of the securities held remain of the highest quality. Moreover, the Company continues to receive payments of interest and principal as they become due, and the Company's expectation is that those payments will continue to be received timely. Based on this evaluation, as of June 30, 2025 and December 31, 2024, the Company determined that unrealized losses of its marketable securities were primarily attributable to changes in interest rates and non-credit related factors. As such, no allowances for credit losses were recorded at June 30, 2025 or December 31, 2024.

Interest receivable as of June 30, 2025 and December 31, 2024 was $1.2 million and $1.0 million, respectively, and is recorded as a component of prepaid expenses and other current assets on the Company’s condensed balance sheets.

As of June 30, 2025 and December 31, 2024, all marketable securities in an unrealized loss position had been in an unrealized loss position for less than 12 months. As of June 30, 2025, the Company held 50 marketable securities in an unrealized loss position. As of December 31, 2024, the Company held 36 marketable securities in an unrealized loss position.

As of June 30, 2025, the following table summarizes the amortized cost and the unrealized gains (losses) of the marketable securities presented within marketable securities and cash equivalents (in thousands):

As of December 31, 2024, the following table summarizes the amortized cost and the unrealized gains (losses) of the marketable securities presented within marketable securities and cash equivalents (in thousands):

As of June 30, 2025, the following table summarizes marketable securities in an unrealized loss position (in thousands):

As of December 31, 2024, the following table summarizes marketable securities in an unrealized loss position (in thousands):

Note 5. Commitments and Contingencies

Legal Proceedings

In the ordinary course of business, the Company may be subject to legal proceedings, claims and litigation, as the Company operates in an industry susceptible to patent or other legal claims. The Company is not currently a party to any legal proceeding that, if determined adversely to the Company, in management’s opinion, is expected to individually or in the aggregate have a material adverse effect on its business, financial condition or liquidity and results of operations.

Indemnifications

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. As permitted under Delaware law and in accordance with its bylaws, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is or was serving in such capacity. The Company is also party to indemnification agreements with its officers and directors.

The maximum potential amount of future payments that the Company could be required to make under these provisions is not determinable; however, the Company currently holds director and officer liability insurance. This insurance limits the Company’s exposure and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. In addition, the Company is not currently aware of any indemnification claims that could have a material effect on its condensed financial statements.

Note 6. Common Stock

As of June 30, 2025 and December 31, 2024, the Company was authorized to issue 500.0 million shares of common stock, par value $0.001 per share.

The Company reserved the following shares of common stock, on an as-converted basis, for future issuance:

Note 7. Stock-Based Compensation

Stock Plans

In October 2024, the Company’s board of directors adopted, and its stockholders approved, the 2024 Stock Option and Incentive Plan (the “2024 Plan”), which superseded the Company’s 2021 Stock Option and Grant Plan, as amended (the “2021 Plan”) (together, the “Stock Plans”).

On January 1, 2025,2.2 million shares of common stock, representing 5% of the Company’s outstanding shares of common stock as of December 31, 2024, were added to the 2024 Plan. As of June 30, 2025, there were 5.5 million shares available for issuance under the 2024 Plan.

Restricted Stock Awards

The following summarizes restricted stock award activity:

Restricted stock awards of 341,721 and 576,829 shares were subject to repurchase as of June 30, 2025 and December 31, 2024, respectively. The aggregate grant date fair value of shares vested during the three and six months ended June 30, 2025 was $0.3 million and $0.7 million, respectively.

Stock Options

The following summarizes stock option activity:

The aggregate fair value of stock options that vested for the three and six months ended June 30, 2025 was $0.9 million and $1.7 million, respectively. The stock options granted in thethree months ended June 30, 2025 had a weighted-average grant-date fair value per share of $6.73 and a total grant-date fair value of $1.9 million. The stock options granted in thesix months ended June 30, 2025 had a weighted-average grant-date fair value per share of $8.06 and a total grant-date fair value of $4.8 million. The total intrinsic value of stock options exercised during three and six months ended June 30, 2025 was $0.4 million and $0.7 million, respectively.

Of the total stock options granted during the six months ended June 30, 2025, options to purchase 0.2 million shares granted to one of the Company's officers include accelerated vesting provisions associated with certain change of control events.

Stock Option Valuation

The weighted-average assumptions used to value employee and non-employee stock option awards granted under the Stock Plans using the Black Scholes option pricing model, were as follows:

2024 ESPP

In October 2024, the Company’s board of directors adopted, and its stockholders approved, the 2024 Employee Stock Purchase Plan (the “2024 ESPP”), which became effective immediately prior to the effective date of the Company's IPO.

As of June 30, 2025, the Company hasnot issued any shares under the 2024 ESPP as the first offering period began in May 2025, and the first purchase date has not yet taken place. As of June 30, 2025, there were 0.4 million shares available for issuance under the 2024 ESPP. For the three and six months ended June 30, 2025, the Company recorded approximately $0.3 million of compensation expense associated with the 2024 ESPP.

Stock-based Compensation Expense

Stock-based compensation expense for restricted stock awards, stock options and the 2024 ESPP recognized in the Company’s condensed statements of operations and comprehensive loss is presented as follows (in thousands):

As of June 30, 2025, total unrecognized stock-based compensation expense related to unvested restricted stock awards and unvested stock options was $16.3 million, which is expected to be recognized over a weighted-average period of 2.6 years. As of June 30, 2025, total unrecognized stock-based compensation expense related to the 2024 ESPP was $1.3 million, which is expected to be recognized over a weighted average period of 1.2 years.

Note 8. Related Parties

Third Rock Ventures

In August 2021, the Company entered into a service agreement (the “TRV service agreement”) with Third Rock Ventures, LLC (“TRV”), a holder of more than 5% of the Company’s outstanding capital stock, under which TRV provides consulting services to the Company. For the three and six months ended June 30, 2025, the Company incurred no fees under the TRV service agreement. For the three and six months ended June 30, 2024, under the TRV service agreement, the Company incurred fees of$0.1 million which were recorded within general and administrative expenses in the Company’s condensed statements of operations and comprehensive loss. As of December 31, 2024, $0.1 million of expense related to TRV was recorded in accrued expenses and other current liabilities. There wereno expenses related to TRV in accrued expenses and other current liabilities on the Company’s condensed balance sheets at June 30, 2025.

The Company’s former interim Chief Medical Officer, and also a member of the Company’s board of directors, is affiliated with TRV (the “TRV Board Member”). The TRV Board Member did not receive any cash compensation from the Company for his service as its interim Chief Medical Officer, as his services were provided to the Company through the TRV service agreement. The TRV Board Member ceased serving as interim Chief Medical Officer in September 2024. In December 2024, the Company entered into a separate consulting agreement with the TRV Board Member, which includes cash compensation to be paid directly to the TRV Board member.

During the three and six months ended June 30, 2025, total fees incurred related to the TRV Board Member’s consulting services were immaterial and $0.1 million, respectively. As of June 30, 2025, outstanding accounts payable to the TRV Board Member for consulting services was immaterial.

For the three and six months ended June 30, 2024, the fees attributed to consulting services provided by the TRV Board Member as the interim Chief Medical Officer were immaterial and $0.1 million, respectively. Additionally, as compensation for his services as the Company's interim Chief Medical Officer, the Company granted him options to purchase 23,227 shares of common stock during thesix months ended June 30, 2024 at an exercise price of $2.76 per share.

Note 9. Net Loss Per Share

For all periods presented, diluted net loss per share is the same as basic net loss per share since the effect of including potential common shares is anti-dilutive. Potentially dilutive securities not included in the calculation of diluted net loss per share were as follows (in common stock equivalent shares):

Note 10. Segment Information

The Company operates inone segment, which is GPCR oral small molecule drug discovery. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The measure of segment profit or loss is net loss, which is also reported on the condensed statements of operations and comprehensive loss as net loss.

The measure of segment assets is reported on the balance sheet as total assets. The CODM uses segment net loss to monitor spending, assess performance for the Company and management, evaluate the progress of completing corporate goals, decide how to allocate resources among the Company’s clinical and pre-clinical portfolios, and make strategic decisions about business development opportunities.

The CODM is regularly provided with the following significant segment expenses:

(*) Other segment expenses include facility-related and office-related costs, information technology costs, general laboratory costs, and other operating expenses.

As of June 30, 2025 and December 31, 2024, all of the Company’s property and equipment was maintained in the U.S. For the three and six months ended June 30, 2025 and 2024, the Company’s revenue was generated from providing research services and was earned in the U.S.

Note 11. Subsequent Event

On July 4, 2025, the One Big Beautiful Bill Act (“H.R.1”) was signed into law, which introduced significant changes to the U.S. federal income tax code. Among other changes, H.R.1 makes permanent key elements of the Tax Cuts and Jobs Act, including restoring 100% bonus depreciation, eliminating the capitalization requirement for domestic research and development expenses, and modifying the business interest expense limitation, which now allows depreciation and amortization to be included in the limitation calculation. ASC 740 requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted in the third quarter of 2025. The Company is in the process of evaluating H.R.1's impact on its condensed financial statements.