AN2 Therapeutics, Inc.

Previous wording

The following discussion and analysis of our financial condition as of March 31, 2025 and results of operations for the three months ended March 31, 2025 and 2024 should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”) and our audited financial statements and the related notes thereto included as a part of our Annual Report on Form 10-K for the year ended December 31, 2024. Except as otherwise indicated herein or as the context otherwise requires, references in this Form 10-Q to “AN2” “the Company,” “we,” “us” and “our” refer to AN2 Therapeutics, Inc.

Current wording

The following discussion and analysis of our financial condition as of June 30, 2025 and results of operations for the three and six months ended June 30, 2025 and 2024 should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”) and our audited financial statements and the related notes thereto included as a part of our Annual Report on Form 10-K for the year ended December 31, 2024. Except as otherwise indicated herein or as the context otherwise requires, references in this Form 10-Q to “AN2” “the Company,” “we,” “us” and “our” refer to AN2 Therapeutics, Inc.

Previous wording

We are a biopharmaceutical company focused on discovering and developing novel small molecule therapeutics derived from our boron chemistry platform. AN2 has a pipeline of boron-based compounds in development for Chagas disease, non-tuberculous mycobacterial (“NTM”) lung disease and melioidosis, along with early-stage programs focused on targets in infectious diseases and oncology. We are committed to delivering high-impact drugs to patients that address critical medical needs and improve health outcomes.

Current wording

We are a biopharmaceutical company focused on discovering and developing novel small molecule therapeutics derived from our boron chemistry platform. AN2 has a pipeline of boron-based compounds in development for Chagas disease, melioidosis, and non-tuberculous mycobacterial (“NTM”) lung disease caused by M. abscessus, along with programs focused on targets in oncology and infectious diseases. We are committed to delivering high-impact drugs to patients that address critical medical needs and improve health outcomes.

Previous wording

We have initiated Phase-1 start up activities with AN2-502998 (formerly known as AN15368), an investigational, boron-based small molecule in development for the treatment of chronic Chagas disease. In October 2023, we announced an exclusive license agreement with the University of Georgia Research Foundation to advance the development of AN2-502998, originally discovered by researchers at Anacor, in close collaboration with the University of Georgia. AN2-502998 is the only compound of which we are aware to have demonstrated curative activity in preclinical studies across multiple species, including in non-human primates with long-term, naturally acquired chronic infections of diverse T. cruzi genetic types. We anticipate completion of the Phase 1 study in the second half of 2025.

Current wording

In May 2025, we reported the initiation of Phase-1 start up activities with AN2-502998 (formerly known as AN15368), an investigational, boron-based small molecule in development for the treatment of chronic Chagas disease and in August 2025, we completed dosing the first Single Ascending Dose cohort in the trial. The Phase 1 study is evaluating the safety, tolerability, and pharmacokinetics of oral AN2-502998 for chronic Chagas disease, in healthy volunteers. In October 2023, we announced an exclusive license agreement with the University of Georgia Research Foundation to advance the development of AN2-502998, originally discovered by researchers at Anacor, in close collaboration with the University of Georgia. AN2-502998 is the only compound of which we are aware to have demonstrated curative activity in preclinical studies across multiple species, including in non-human primates with long-term, naturally acquired chronic infections of diverse T. cruzi genetic types. We anticipate completion of dosing in the Phase 1 study in the second half of 2025, and anticipate initiation of a Phase 2 proof-of-concept study in 2026. In July 2025, we announced a collaboration with the non–profit medical research organization Drugs for Neglected Diseases initiative (“DNDi”) to advance clinical development of AN2-502998. Through the collaboration, DNDi will share its extensive clinical trial network and expertise in Chagas disease to rapidly advance the clinical development of AN2-502998.

Previous wording

The Company is pursuing a number of oncology targets where we believe boron chemistry offers a competitive advantage in terms of binding-site differentiation, pharmacodynamics, drug-like properties and IP, including initially ENPP1 and PI3Kα. The unique binding modes of boron-containing compounds enable the discovery of inhibitors with high ligand efficiency against targets considered undruggable or difficult to access with traditional chemistry approaches. Boron chemistry has produced first-in-class molecules against a number of targets including CPSF3 (AN2-502998 and acoziborole) and LeuRS (epetraborole, GSK656/AN10070 and tavaborole). The Company has discovered preclinical compounds with profiles that are sub-nanomolar, highly selective and have excellent oral pharmacokinetics. We anticipate advancing the first oncology compound(s) into development later this year with potential clinical proof of concept within the Company’s current cash runway.

Current wording

We are pursuing a number of oncology targets where we believe boron chemistry offers a competitive advantage in terms of binding-site differentiation, pharmacodynamics, drug-like properties and IP, including initially ENPP1 and PI3Kα. The unique binding modes of boron-containing compounds enable the discovery of inhibitors with high ligand efficiency against targets considered undruggable or difficult to access with traditional chemistry approaches. Boron chemistry has produced first-in-class molecules against a number of targets including CPSF3 (AN2-502998 and acoziborole) and LeuRS (epetraborole, ganfeborole and tavaborole). The Company has discovered preclinical compounds with profiles that are sub-nanomolar, highly selective and have excellent oral pharmacokinetics. We anticipate advancing the first oncology compound into development later this year with potential clinical proof of concept within the Company’s current cash runway. We expect to advance our second oncology compound into development in the first half of 2026.

Previous wording

We are studying epetraborole for the treatment of acute melioidosis. We completed enrollment in a 200-patient observational trial (non-epetraborole treatment) in October 2024 and expect to announce topline data in the second quarter of 2025. This data will inform a Phase 2 proof of concept study that is planned to initiate start up activities in the second half of 2025. Melioidosis is a deadly bacterial infection and global bioterrorism threat with a 90-day mortality rate approaching 40% using standard of care (SOC) drugs ceftazidime or meropenem. The aim of the program is to meaningfully lower the expected mortality rate by dosing epetraborole on top of SOC.

Current wording

We are studying epetraborole for the treatment of acute melioidosis, a highly lethal bacterial infection and recognized biothreat. We completed enrollment in a 200-patient observational trial (non-epetraborole treatment) in October 2024 and in June 2025 announced key insights from the trial, which reinforce the high mortality of the disease, despite standard of care (SOC). This study provides critical data which will allow the Company to optimize the design of upcoming clinical studies. Discussions are underway with the U.S. government to fund Phase 2 development of epetraborole in acute melioidosis. Melioidosis is a highly lethal bacterial infection and recognized biothreat with a 90-day mortality rate approaching 40%, despite SOC drugs, including ceftazidime or meropenem. The aim of the program is to meaningfully lower the expected mortality rate by dosing epetraborole on top of SOC.

Previous wording

We do not have any products approved for sale and have not generated any revenue since inception. Our net losses were $10.6 million and $16.6 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had an accumulated deficit of $216.4 million. We have funded our operations from the sale and issuance of redeemable convertible preferred stock and proceeds from our initial public offering (“IPO”), “at-the-market” equity offering program (“ATM Offering”) and an underwritten offering (the “Underwritten Offering”). From November 2019 through October 2020, we raised an aggregate of $12.0 million from the sale of Series A redeemable convertible preferred stock. In March 2021, we raised an aggregate of $80.0 million from the sale of Series B redeemable convertible preferred stock. In March and April 2022, we completed our IPO, with gross proceeds of $79.4 million and net proceeds of $70.4 million, net of underwriting discounts, commissions and offering expenses. In June 2023, we raised gross proceeds of $20.0 million from the ATM Offering and net proceeds of $19.1 million, after deducting commissions and offering expenses. In August 2023, we raised gross proceeds of $70.0 million from the Underwritten Offering and net proceeds of $65.5 million, after deducting commissions and offering expenses.

Current wording

We do not have any products approved for sale and have not generated any revenue since inception. Our net losses were $17.1 million and $31.1 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, we had an accumulated deficit of $222.9 million. We have funded our operations from the sale and issuance of redeemable convertible preferred stock and proceeds from our initial public offering (“IPO”), “at-the-market” equity offering program (“ATM Offering”) and an underwritten offering (the “Underwritten Offering”). From November 2019 through October 2020, we raised an aggregate of $12.0 million from the sale of Series A redeemable convertible preferred stock. In March 2021, we raised an aggregate of $80.0 million from the sale of Series B redeemable convertible preferred stock. In March and April 2022, we completed our IPO, with gross proceeds of $79.4 million and net proceeds of $70.4 million, net of underwriting discounts, commissions and offering expenses. In June 2023, we raised gross proceeds of $20.0 million from the ATM Offering and net proceeds of $19.1 million, after deducting commissions and offering expenses. In August 2023, we raised gross proceeds of $70.0 million from the Underwritten Offering and net proceeds of $65.5 million, after deducting commissions and offering expenses.

Previous wording

As of March 31, 2025, we had cash, cash equivalents, and investments of $78.5 million. We believe that our available cash will be sufficient to fund our planned operations under our current operating plan through at least twelve months following the date of this Form 10-Q.

Current wording

As of June 30, 2025, we had cash, cash equivalents, and investments of $71.2 million. We believe that our available cash will be sufficient to fund our planned operations under our current operating plan through at least twelve months following the date of this Form 10-Q.

Previous wording

Substantially all of our research and development expenses consist of expenses incurred in connection with the development of our initial product candidate, epetraborole, and other product candidates. These expenses include fees incurred under arrangements with third parties, including CROs, CMOs, preclinical and nonclinical testing organizations, and academic and non-profit institutions. Research and development expenses also include consulting fees, license fees, payroll and personnel-related expenses, including salaries and bonuses, payroll taxes, employee benefit costs and non-cash stock-based compensation for our research and development employees. We expense both internal and external research and development expenses as they are incurred.

Current wording

Substantially all of our research and development expenses consist of expenses incurred in connection with the development of our product candidates. These expenses include fees incurred under arrangements with third parties, including CROs, CMOs, preclinical and nonclinical testing organizations, and academic and non-profit institutions. Research and development expenses also include consulting fees, license fees, payroll and personnel-related expenses, including salaries and bonuses, payroll taxes, employee benefit costs and non-cash stock-based compensation for our research and development employees. We expense both internal and external research and development expenses as they are incurred.

Previous wording

Research and development expenses were $7.7 million for the three months ended March 31, 2025 compared to $14.7 million for the three months ended March 31, 2024. The decrease of $7.0 million was primarily due to decreases in clinical trial costs, personnel-related expenses, consulting and outside services and other costs, and facilities and miscellaneous expenses, partially offset by increases in preclinical and research study expenses and chemistry manufacturing and controls (“CMC”) expenses. Clinical trials expenses decreased by $5.3 million primarily as a result of reduced expenses resulting from the termination of our EBO-301 trial in August 2024. Personnel-related expenses decreased by $2.3 million primarily as a result of our restructuring activities in 2024. Consulting and outside services costs decreased by $0.9 million primarily due to reduced activities related to the development of epetraborole and the timing of non-dilutive contract offsets. Other costs decreased by $0.5 million. These decreases were partially offset by an increase of $1.3 million in expenses associated with our preclinical and research programs. CMC costs increased by $0.5 million due to increased CMC activities related to the Chagas program, partially offset by lower costs related to epetraborole development and the timing of non-dilutive contract offsets. License fees increased by $0.2 million. During the three months ended March 31, 2025 a total reimbursement of $0.4 million of operating expenses was recognized related to our funding arrangements.

Current wording

Research and development expenses were $3.2 million for the three months ended June 30, 2025 compared to $12.1 million for the three months ended June 30, 2024. The decrease of $8.9 million was primarily due to decreases in clinical trial expenses, chemistry manufacturing and controls ("CMC") expenses, personnel-related expenses, consulting and outside services expenses, facilities and miscellaneous expenses, and partially offset by increased preclinical and research study expenses. Clinical trial expenses decreased by $4.3 million primarily due to the termination of the EBO-301 trial in August 2024, partially offset by the initiation of start-up activities of the Phase 1 trial in Chagas disease. CMC expenses decreased by $1.8 million due to decreases in expenses related to epetraborole development in treatment refractory NTM and the timing of when receipt of research contract offsets became reasonably assured, partially offset by increased CMC activities for our Chagas program. Personnel-related expenses decreased by $1.8 million primarily due to our restructuring activities in 2024. Consulting and outside services expenses decreased by $0.9 million primarily due to reduced activities related to the clinical development of epetraborole in treatment refractory NTM, completion of the melioidosis observational study, and the timing of non-dilutive contract offsets. Allocated facilities and miscellaneous expenses decreased by $0.8 million primarily due to recognition of our qualified small business payroll tax credit and lower costs as a result of our restructuring activities. These decreases were partially offset by increased preclinical and research study expenses of $0.7 million resulting from the prioritization of certain research programs. During the three months ended June 30, 2025, and 2024, reimbursement of $3.7 million and $0.5 million, respectively, of operating expenses was recognized related to our funding arrangements.

Previous wording

Interest income was $0.9 million for the three months ended March 31, 2025 compared to $1.7 million for the three months ended March 31, 2024. The decrease of $0.8 million was due to lower cash, cash equivalents, and investment balances and lower interest rates in 2025 as compared to 2024.

Current wording

Interest income was $0.8 million for the three months ended June 30, 2025 compared to $1.4 million for the three months ended June 30, 2024. The decrease of $0.6 million was due to lower cash, cash equivalents, and investment balances and lower interest rates in 2025 as compared to 2024.

Previous wording

General and administrative expenses were $3.8 million for the three months ended March 31, 2025 compared to $3.6 million for the three months ended March 31, 2024. The increase of $0.2 million was primarily attributable to a $0.5 million increase in professional services expenses, partially offset by a $0.2 million decrease in consulting and outside services and a $0.1 million decrease in personnel-related expenses.

Current wording

General and administrative expenses were $7.9 million for the six months ended June 30, 2025 compared to $7.4 million for the six months ended June 30, 2024. The increase of $0.5 million was primarily attributable to a $0.7 million increase in professional and outside services expenses, partially offset by $0.1 million decrease in personnel-related expenses and a $0.1 million decrease in facilities and other related expenses.

Previous wording

We have incurred net losses since our inception. For the three months ended March 31, 2025 and 2024, we had net losses of $10.6 million and $16.6 million, respectively, and we expect to incur substantial additional losses in future periods. As of March 31, 2025, we had an accumulated deficit of $216.4 million. As of March 31, 2025, we had cash, cash equivalents, short-term investments and long-term investments of $78.5 million. Based on our current plan, we believe that our available cash will be sufficient to fund our operations for at least 12 months following the date of this Form 10-Q.

Current wording

We have incurred net losses since our inception. For the six months ended June 30, 2025 and 2024, we had net losses of $17.1 million and $31.1 million, respectively, and we expect to incur substantial additional losses in future periods. As of June 30, 2025, we had an accumulated deficit of $222.9 million. As of June 30, 2025, we had cash, cash equivalents, short-term investments and long-term investments of $71.2 million. Based on our current plan, we believe that our available cash will be sufficient to fund our operations for at least 12 months following the date of this Form 10-Q.

Previous wording

We do not have any products approved for sale, and we have never generated any revenue from contracts with customers. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval for and commercialize any of our current and future product candidates and we do not know when, or if, those events will occur. Historically, we have incurred operating losses and negative cash flows as a result of ongoing efforts to develop our initial drug product candidate, epetraborole, including conducting ongoing preclinical and nonclinical studies, clinical trials, API and drug product materials manufacturing, and providing general and administrative support for these operations. We expect our negative cash flows to increase significantly over the next several years as we advance our product candidates through clinical development, seek regulatory approval, prepare for and, if approved, proceed to commercialization, and continue our research and development efforts. We are subject to all the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business. Moreover, we expect to continue to incur costs associated with operating as a public company. We anticipate that we will need substantial additional funding in connection with our continuing operations, as we do not expect positive cash flows from operations in the foreseeable future.

Current wording

We do not have any products approved for sale, and we have never generated any revenue from contracts with customers. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval for and commercialize any of our current and future product candidates and we do not know when, or if, those events will occur. Historically, we have incurred operating losses and negative cash flows as a result of ongoing efforts to develop our product candidates, including conducting ongoing preclinical and nonclinical studies, clinical trials, API and drug product materials manufacturing, and providing general and administrative support for these operations. We expect our negative cash flows to increase significantly over the next several years as we advance our product candidates through clinical development, seek regulatory approval, prepare for and, if approved, proceed to commercialization, and continue our research and development efforts. We are subject to all the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business. Moreover, we expect to continue to incur costs associated with operating as a public company. We anticipate that we will need substantial additional funding in connection with our continuing operations, as we do not expect positive cash flows from operations in the foreseeable future.

Previous wording

the timing of, and the costs involved in, obtaining regulatory approvals for our drug product candidates;

Current wording

the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates;

Previous wording

Net cash used in operating activities was $10.6 million for the three months ended March 31, 2025, which consisted of a net loss of $10.6 million, primarily due to the use of funds to develop our initial drug product candidate, and a net decrease of $1.6 million in our net operating assets and liabilities, offset by $1.6 million in non-cash charges. The net decrease in our operating assets and liabilities was primarily due to a decrease of $2.2 million in accrued liabilities, accrued compensation, accounts payable, and other current liabilities partially offset by a decrease of $0.6 million in prepaid expenses and other assets. The non-cash charges consisted of stock-based compensation expense of $2.0 million, partially offset by net accretion of discounts on investments of $0.4 million.

Current wording

Net cash used in operating activities was $18.2 million for the six months ended June 30, 2025, which consisted of a net loss of $17.1 million, primarily due to the use of funds to develop our product candidates, and a net decrease of $4.4 million in our net operating assets and liabilities, partially offset by $3.3 million in non-cash charges. The net decrease in our operating assets and liabilities was primarily due to a decrease of $3.2 million in accrued liabilities, accounts payable, accrued compensation, and other current liabilities and an increase of $1.2 million in prepaid expenses and other assets. The non-cash charges consisted of stock-based compensation expense of $4.0 million, partially offset by net accretion of discounts on investments of $0.7 million.

Previous wording

Net cash used in operating activities was $17.6 million for the three months ended March 31, 2024, which consisted of a net loss of $16.6 million, due to the use of funds to develop our initial drug product candidate, and a net decrease of $2.3 million in our net operating assets and liabilities, partially offset by $1.3 million in non-cash charges. The net decrease in our operating assets and liabilities was primarily due to an increase in accrued liabilities, accounts payable, and other current liabilities and a decrease in prepaid expenses and other assets. The non-cash charges consisted of stock-based compensation expense of $2.4 million, partially offset by net accretion of discounts on investments of $1.1 million.

Current wording

Net cash used in operating activities was $32.0 million for the six months ended June 30, 2024, which consisted of a net loss of $31.1 million, primarily due to the use of funds to develop our initial product candidate, and a net decrease of $3.6 million in our net operating assets and liabilities, partially offset by $2.7 million in non-cash charges. The net decrease in our operating assets and liabilities was primarily due to an increase in accrued liabilities, accounts payable, and other current liabilities and a decrease in prepaid expenses and other assets. The non-cash charges consisted of stock-based compensation expense of $4.7 million, partially offset by net accretion of discounts on investments of $2.0 million.

Previous wording

Net cash provided by investing activities was $9.2 million for the three months ended March 31, 2025, which primarily consisted of $31.5 million in proceeds from the maturity of investments, partially offset by $22.3 million in purchases of investments.

Current wording

Net cash provided by investing activities was $15.0 million for the six months ended June 30, 2025, which primarily consisted of $49.0 million in proceeds from the maturity of investments, partially offset by $34.0 million in purchases of investments.

Previous wording

Net cash provided by investing activities was $26.3 million for the three months ended March 31, 2024, which primarily consisted of $26.3 million in proceeds from the maturity of investments.

Current wording

Net cash provided by investing activities was $42.8 million for the six months ended June 30, 2024, which primarily consisted of $55.3 million in proceeds from the maturity of investments, partially offset by $12.6 million in purchases of investments.

Previous wording

Net cash provided by financing activities was $0.1 million for the three months ended March 31, 2025, which consisted of $0.05 million in proceeds from the issuance of common stock under the employee stock purchase plan and $0.05 million from the exercise of stock options.

Current wording

Net cash provided by financing activities was $0.1 million for the six months ended June 30, 2025, which consisted of $0.05 million in proceeds from the issuance of common stock under the employee stock purchase plan and $0.05 million from the exercise of stock options.

Previous wording

Net cash provided by financing activities was $0.3 million for the three months ended March 31, 2024, which consisted of $0.1 million in proceeds from the issuance of common stock under the employee stock purchase plan and $0.2 million from the exercise of stock options.

Current wording

Net cash provided by financing activities was $0.3 million for the six months ended June 30, 2024, which consisted of $0.1 million in proceeds from the issuance of common stock under the employee stock purchase plan and $0.2 million from the exercise of stock options.

Previous wording

The preparation of financial statements and related disclosures in conformity with GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in the condensed financial statements and accompanying notes. “Note 2—Summary of Significant Accounting Policies” to the financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024 describes the significant accounting policies and methods used in the preparation of the financial statements. Our critical accounting estimates, identified in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K include for the year ended December 31, 2024, but are not limited to, the discussion of estimates used for research and development and stock-based compensation. Such accounting policies and estimates require significant judgments and assumptions to be used in the preparation of the condensed financial statements, and actual results could differ materially from the amounts reported.

Current wording

The preparation of financial statements and related disclosures in conformity with GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in the condensed financial statements and accompanying notes. “Note 2—Summary of Significant Accounting Policies” to the financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024 describes the significant accounting policies and methods used in the preparation of the financial statements. Our critical accounting estimates, identified in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K include for the year ended December 31, 2024, but are not limited to, the discussion of estimates used for research and development and stock-based compensation. Such accounting policies and estimates require significant judgments and assumptions to be used in the preparation of the condensed financial statements, and actual results could differ materially from the amounts reported. There have been no material changes to these critical accounting policies and estimates through June 30, 2025 from those discussed in our Annual Report on Form 10-K.