CAPRICOR THERAPEUTICS, INC.

Previous wording

In the third quarter of 2024, we conducted a pre-Biologics License Application (BLA) meeting with the U.S. Food and Drug Administration (FDA) to discuss key components of our submission strategy, including the use of data from our HOPE-2 and HOPE-2 open label extension (OLE) trials, commercial manufacturing readiness and potential label considerations. Following additional discussions with the FDA, we completed our rolling BLA submission in December 2024. In early 2025, the FDA accepted our application for review, granted it Priority Review, and assigned a Prescription Drug User Fee Act (PDUFA) target action date of August 31, 2025.

Current wording

In the third quarter of 2024, the Company conducted a pre-Biologics License Application (“BLA”) meeting with the U.S. Food and Drug Administration (“FDA”) to discuss key components of its submission strategy, including the use of data from the HOPE-2 and HOPE-2 Open-Label Extension (“OLE”) trials, commercial manufacturing readiness, and potential label considerations. Following additional interactions with the FDA, the Company completed its rolling BLA submission in December 2024. In early 2025, the FDA accepted the application for review, granted Priority Review status, and assigned a Prescription Drug User Fee Act (“PDUFA”) target action date of August 31, 2025.

Previous wording

At the May 2025 mid-cycle review meeting, the FDA noted no significant deficiencies. In May 2025, the FDA conducted a Pre-License Inspection (PLI) of our San Diego manufacturing facility for deramiocel. The inspection concluded with a Form 483 containing several observations. We were recently informed by the FDA that they have reviewed and found acceptable all responses to the 483 observations noted in the PLI.

Current wording

In May 2025, the Company held a mid-cycle review meeting, during which the FDA noted no significant deficiencies. That same month, the FDA conducted a Pre-License Inspection (“PLI”) of the Company’s San Diego GMP manufacturing facility for Deramiocel. The inspection concluded with a Form 483 containing several observations, to which the Company provided written responses. The FDA subsequently confirmed that all responses to the Form 483 observations were found acceptable.

Previous wording

In July 2025, we received a Complete Response Letter (CRL) stating that the current BLA does not meet the statutory requirement for substantial evidence of effectiveness and the need for additional clinical data. The CRL also cited certain outstanding items in the Chemistry, Manufacturing, and Controls (CMC) section, many of which we had previously addressed but were not reviewed by the FDA due to timing of the issuance of the CRL. At this time, we have internally addressed the remaining CMC issues noted in the CRL and have prepared formal responses which we plan to submit with our response to the CRL.

Current wording

In July 2025, the Company received a Complete Response Letter (“CRL”) from the FDA stating that the current BLA did not meet the statutory requirement for substantial evidence of effectiveness and that additional clinical data would be required. The CRL also cited certain outstanding items in the Chemistry, Manufacturing, and Controls (“CMC”) section, many of which had been addressed by the Company but were not reviewed prior to issuance of the CRL.

Previous wording

Our ongoing Phase 3 clinical trial, HOPE-3, is a 1:1 randomized, double-blind, placebo-controlled study evaluating the safety and efficacy of deramiocel in approximately 104 boys with DMD. Participants receive four doses over 12 months, and the trial includes two manufacturing cohorts: Cohort A (Los Angeles facility) and Cohort B (San Diego facility). In the fourth quarter of 2023, the Data Safety Monitoring Board (DSMB) reviewed a pre-specified futility analysis and recommended that the study continue as planned.

Current wording

Our HOPE-3, Phase 3 clinical trial, is a 1:1 randomized, double-blind, placebo-controlled study evaluating the safety and efficacy of Deramiocel in 105 boys with DMD. Participants receive four doses over 12 months, and the trial includes two manufacturing cohorts: Cohort A (Los Angeles facility) and Cohort B (San Diego facility). In 2023, the Data Safety Monitoring Board (“DSMB”) reviewed a pre-specified futility analysis and recommended that the study continue as planned. Topline HOPE-3 data are expected in the coming weeks (fourth quarter of 2025) and the Company plans to submit the HOPE-3 results with a formal complete response with the goal of supporting a label encompassing at least cardiac function and potentially skeletal muscle function in patients with Duchenne muscular dystrophy.

Previous wording

Additionally, if positive, HOPE-3 may support international regulatory filings, and we have initiated discussions with health authorities in Europe and Japan to define potential approval pathways.

Current wording

The study remains blinded at present, and our statistical analysis plan (“SAP”) has been submitted to the FDA. Importantly, safety data from the trial have been regularly reported to the FDA, and no significant safety signals have been observed. Across our programs, we have administered more than 800 infusions to approximately 150 DMD patients with Deramiocel continuing to demonstrate a strong and consistent safety profile. Positive results from the HOPE-3 trial, if achieved, are expected to provide confirmatory evidence to support BLA resubmission and FDA review. The resubmission is expected to be reviewed under a Type 2 classification with an anticipated review of up to six-months for approval. Additionally, if positive, HOPE-3 may support international regulatory filings, and we have initiated discussions with health authorities in Europe and Japan to define potential approval pathways.

Previous wording

We have entered into exclusive Commercialization and Distribution Agreements with Nippon Shinyaku for the United States and Japan. We aim to efficiently scale commercial efforts in key markets upon potential approval.

Current wording

We have entered into exclusive Commercialization and Distribution Agreements with Nippon Shinyaku for the United States and Japan. At this time, we are actively pursuing commercial activities in order to be prepared for commercial launch, if approved.

Previous wording

Extracellular vesicles, including exosomes and microvesicles, are nanoscale, membrane-enclosed particles secreted by most cells. These vesicles carry proteins, lipids, and nucleic acids (such as mRNA and microRNAs) and play a key role in intercellular communication. They signal by binding to membrane receptors or delivering their cargo directly into target cells, influencing functions such as inflammation, survival, proliferation, and tissue regeneration. Due to their small size, low immunogenicity, and ability to interact in native cellular language, exosomes represent a promising new class of therapeutic agents capable of modulating complex biological systems. As cell-free products, they offer advantages in storage, handling, and delivery similar to traditional biologics like monoclonal antibodies.

Current wording

Extracellular vesicles, including exosomes and microvesicles, are nanoscale, membrane-enclosed particles secreted by most cells. These vesicles carry proteins, lipids, and nucleic acids (such as mRNA and microRNAs) and play a key role in intercellular communication. They signal by binding to membrane receptors or delivering their cargo directly into target cells, influencing functions such as inflammation, survival, proliferation, and tissue regeneration. Due to their small size, low immunogenicity, and ability to interact in native cellular language, exosomes represent a potentially promising new class of therapeutic agents capable of modulating complex biological systems. As cell-free products, they offer advantages in storage, handling, and delivery similar to traditional biologics like monoclonal antibodies.

Previous wording

In 2024, Capricor was selected to participate in Project NextGen, an initiative led by the U.S. Department of Health and Human Services aimed at advancing next generation COVID-19 vaccines with broader and longer lasting protection. Under this program, NIAID is sponsoring a Phase 1 clinical trial of our StealthX™ vaccine. The trial will be conducted and overseen by NIAID’s Division of Microbiology and Infectious Diseases (DMID), with Capricor supplying the clinical material.

Current wording

In 2024, Capricor was selected to participate in Project NextGen, an initiative led by the U.S. Department of Health and Human Services aimed at advancing next generation COVID-19 vaccines with broader and longer lasting protection. Under this program, NIAID is sponsoring a Phase 1 clinical trial of our StealthX™ vaccine. The trial is being conducted and overseen by NIAID’s Division of Microbiology and Infectious Diseases (“DMID”), with Capricor supplying the clinical material.

Previous wording

Following the clearance of the Investigational New Drug (IND) application by the FDA, the Phase 1 study initiated in August 2025. The trial includes several dosing arms initially focused on the spike (S) protein, with an additional planned arm which will utilize the nucleocapsid (N) protein, pending separate FDA clearance. If the vaccine meets NIAID’s criteria for safety and efficacy, the program may advance to a funded Phase 2 study.

Current wording

Following the clearance of the Investigational New Drug (“IND”) application by the FDA, the Phase 1 study initiated in August 2025. The trial includes several dosing arms initially focused on the spike (S) protein, with an additional planned arm which will utilize the nucleocapsid (N) protein, pending separate FDA clearance. If the vaccine meets NIAID’s criteria for safety and efficacy, the program may advance to a funded Phase 2 study. Initial data from this study is expected in the first quarter of 2026, subject to completion by NIAID. Due to the government shutdown, at this time, it is uncertain as to whether NIAID will have the resources to fund a Phase 2 study.

Previous wording

As of June 30, 2025, we had cash, cash equivalents, and marketable securities totaling approximately $122.8 million. In the fourth quarter of 2024, we submitted our BLA to the FDA, which triggered our second milestone pursuant to the terms of our U.S. Distribution Agreement with Nippon Shinyaku. In January 2025, we received the $10.0 million milestone payment.

Current wording

As of September 30, 2025, we had cash, cash equivalents, and marketable securities totaling approximately $98.6 million.

Previous wording

approximately $25.9 million and approximately $11.0 million, for the three months ended June 30, 2025 and 2024, respectively. Our net losses were approximately $50.3 million and approximately $20.8 million, for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, we had an accumulated deficit of approximately $250.1 million. We expect to incur significant expenses and operating losses for the foreseeable future.

Current wording

Due to our significant research and development expenditures, and general administrative costs associated with our operations, we have generated substantial operating losses in each period since our inception. Our net losses were approximately $24.6 million and approximately $12.6 million, for the three months ended September 30, 2025 and 2024, respectively. Our net losses were approximately $74.9 million and approximately $33.4 million, for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, we had an accumulated deficit of approximately $274.7 million. We expect to incur significant expenses and operating losses for the foreseeable future.

Previous wording

Clinical Development Income. Clinical development income for the three months ended June 30, 2025 and 2024 was $0 and approximately $4.0 million, respectively. Clinical Development income for the six months ended June 30, 2025 and 2024 was approximately $0 and $8.9 million. As of June 30, 2025, the Company has fully recognized $50.0 million in development milestone payments received from Nippon Shinyaku related to the Exclusive Commercialization and Distribution Agreement (the “U.S. Distribution Agreement”). The upfront payment of $30.0 million and the first milestone payment of $10.0 million was ratably recognized as revenue using a proportional performance method in relation to the completion of the HOPE-3 clinical trial (Cohort A) whereas the $10.0 million related to the second milestone payment was recognized as revenue at the point in time when the BLA was submitted in December 2024.

Current wording

Clinical Development Income. Clinical development income for the three months ended September 30, 2025 and 2024 was $0 and approximately $2.3 million, respectively. Clinical Development income for the nine months ended September 30, 2025 and 2024 was approximately $0 and $11.1 million. As of September 30, 2025, the Company has fully recognized $50.0 million in development milestone payments received from Nippon Shinyaku related to the Exclusive Commercialization and Distribution Agreement (the “U.S. Distribution Agreement”). The upfront payment of $30.0

Previous wording

approximately $2.5 million and $1.1 million, respectively. The increase in investment income for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024 is due to a higher principal balance in our marketable securities, savings and money market fund accounts.

Current wording

Investment Income. Investment income for the three months ended September 30, 2025 and 2024 was approximately $1.7 million and $0.5 million, respectively. Investment income for the nine months ended September 30, 2025 and 2024 was approximately $4.2 million and $1.5 million, respectively. The increase in investment income for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024 is due to a higher principal balance in our marketable securities, savings and money market fund accounts.

Previous wording

Deramiocel for the treatment of DMD– The expenses for our DMD program include costs for personnel, clinical, regulatory and manufacturing-related expenses, including expenses related to the scale-up for potential commercial scale manufacturing if our deramiocel product is approved. In 2025, we expect to spend approximately $45.0 million to $50.0 million primarily consisting of CMC expansion, product inventory buildout, clinical, regulatory and pre-commercial expenses for our deramiocel program.

Current wording

Deramiocel for the treatment of DMD– The expenses for our DMD program include costs for personnel, clinical, regulatory and manufacturing-related expenses, including expenses related to the scale-up for potential commercial scale manufacturing if our Deramiocel product is approved. In 2025, we expect to spend approximately $50.0 million to $55.0 million primarily consisting of CMC expansion, product inventory buildout, clinical, regulatory and pre-commercial expenses for our Deramiocel program.

Previous wording

Exosome-Based Therapeutics and Vaccines – Our exosome platform is in early-stage preclinical development. We expect to spend approximately $5.0 million to $7.0 million during 2025 on development expenses related to our exosomes program, which includes personnel, preclinical studies and manufacturing related expenses for these technologies. Our expenses for this program are primarily focused on the expansion of our engineered exosomes platform including the manufacturing of our StealthX™ vaccine to be used in connection with our collaboration with NIAID.

Current wording

Exosome-Based Therapeutics and Vaccines – Our exosome platform is in early-stage preclinical development. We expect to spend approximately $7.0 million to $9.0 million during 2025 on development expenses related to our exosomes program, which includes personnel, preclinical studies and manufacturing related expenses for these technologies. Our expenses for this program are primarily focused on the expansion of our engineered exosomes platform including the manufacturing of our StealthX™ vaccine to be used in connection with our collaboration with NIAID.

Previous wording

The following table summarizes our liquidity and capital resources as of June 30, 2025 and December 31, 2024 and our net increase (decrease) in cash, cash equivalents, and marketable securities for the six months ended June 30, 2025 and 2024 and is intended to supplement the more detailed discussion that follows. The amounts stated in the tables below are expressed in thousands. We estimate our current cash, cash equivalents, and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2026.

Current wording

The following table summarizes our liquidity and capital resources as of September 30, 2025 and December 31, 2024 and our net increase (decrease) in cash, cash equivalents, and marketable securities for the nine months ended September 30, 2025 and 2024 and is intended to supplement the more detailed discussion that follows. The amounts stated in the tables below are expressed in thousands. We estimate our current cash, cash equivalents, and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2026.

Previous wording

Our total cash, cash equivalents and marketable securities as of June 30, 2025 were approximately $122.8 million compared to approximately $151.5 million as of December 31, 2024. The decrease in cash, cash equivalents and marketable securities from December 31, 2024 to June 30, 2025 is primarily due to our continuing efforts in preparing the Company for potential commercialization. As of June 30, 2025, we had approximately $28.6 million in total liabilities, of which approximately $12.0 million relates to deferred revenue, and approximately $95.7 million in net working capital.

Current wording

Our total cash, cash equivalents and marketable securities as of September 30, 2025 were approximately $98.6 million compared to approximately $151.5 million as of December 31, 2024. The decrease in cash, cash equivalents and marketable securities from December 31, 2024 to September 30, 2025 is primarily due to our continuing efforts in preparing the Company for potential commercialization. As of September 30, 2025, we had approximately $42.6 million in total liabilities, consisting of approximately $14.5 million in lease liabilities, approximately $12.7 million in accounts payable and accrued expenses, and $12.0 million relates to deferred revenue, with net working capital of approximately $72.8 million.

Previous wording

Cash used in operating activities was approximately $26.6 million and approximately $13.6 million for the six months ended June 30, 2025 and 2024, respectively. The increase of approximately $13.0 million in cash used in operating activities is due to an approximately $29.5 million increase in net loss for the six months ended June 30, 2025 as compared to the same period in 2024. Furthermore, there was an increase of approximately $3.7 million in stock-based compensation, approximately $8.9 million in deferred revenue, and approximately $2.9 million in accounts payable and accrued expenses for the six months ended June 30, 2025 as compared to the same period in 2024. To the extent we obtain sufficient capital and/or long-term debt funding and are able to continue developing our product candidates, including if we expand our platform technology portfolio, engage in further research and development activities, and, in particular, conduct preclinical studies and clinical trials, we expect to continue incurring substantial losses.

Current wording

Cash used in operating activities was approximately $46.2 million and approximately $25.2 million for the nine months ended September 30, 2025 and 2024, respectively. The increase of approximately $21.0 million in cash used in operating activities is due to an approximately $41.5 million increase in net loss for the nine months ended September 30, 2025 as compared to the same period in 2024. Furthermore, there was an increase of approximately $5.7 million in stock-based compensation, approximately $11.1 million in deferred revenue, and approximately $3.5 million in accounts payable and accrued expenses for the nine months ended September 30, 2025 as compared to the same period in 2024. To the extent we obtain sufficient capital and/or long-term debt funding and are able to continue developing our product candidates, including if we expand our platform technology portfolio, engage in further research and development activities, and, in particular, conduct preclinical studies and clinical trials, we expect to continue incurring substantial losses.

Previous wording

We had cash flow provided by investing activities of approximately $38.4 million for the six months ended June 30, 2025 and cash flow used in investing activities of approximately $5.2 million for the six months ended June 30, 2024, respectively. The change in investing activities for the six months ended June 30, 2025 as compared to the same period of 2024 is due to the net effect from purchases, sales and maturities of marketable securities and the purchase of approximately $2.6 million in property and equipment, leasehold improvements and construction in progress.

Current wording

We had cash flow provided by investing activities of approximately $54.4 million for the nine months ended September 30, 2025 and approximately $7.2 million for the nine months ended September 30, 2024, respectively. The change in investing activities for the nine months ended September 30, 2025 as compared to the same period of 2024 is due to the net effect from purchases, sales and maturities of marketable securities and the purchase of approximately $6.6 million in property and equipment, leasehold improvements and construction in progress.

Previous wording

We had cash flow provided by financing activities of $69,934 and approximately $4.4 million for the six months ended June 30, 2025 and 2024, respectively. The decrease in cash provided by financing activities for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 is primarily due to the net proceeds from the sale of common stock during 2024.

Current wording

We had cash flow provided by financing activities of $76,884 and approximately $71.7 million for the nine months ended September 30, 2025 and 2024, respectively. The decrease in cash provided by financing activities for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 is primarily due to the net proceeds from the sale of common stock during 2024.

Previous wording

From inception through June 30, 2025, we financed our operations primarily through private and public sales of our equity securities, and payments from distribution agreements and collaboration partners. As we have not generated any revenue from the commercial sale of our products to date, and we do not expect to generate revenue for several years, if ever, we will need to raise substantial additional capital to fund our research and development, including our long-term plans for clinical trials and new product development. We may seek to raise additional funds through various potential sources, such as equity and debt financings, government grants, or through strategic collaborations and license agreements or other distribution agreements. We can give no assurances that we will be able to secure such additional sources of funds to support our operations, complete our clinical trials or if such funds become available to us, that such additional financing will be sufficient to meet our needs. Moreover, to the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technologies or our product candidates or grant licenses on terms that may not be favorable to us.

Current wording

We may seek to raise additional funds through various potential sources, such as equity and debt financings, government grants, or through strategic collaborations and license agreements or other distribution agreements. We can give no assurances that we will be able to secure such additional sources of funds to support our operations, complete our clinical trials or if such funds become available to us, that such additional financing will be sufficient to meet our needs. Moreover, to the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technologies or our product candidates or grant licenses on terms that may not be favorable to us.

Previous wording

Under the terms of the Japan Distribution Agreement, Capricor received an upfront payment of $12.0 million in the first quarter of 2023 and in addition, Capricor will potentially receive additional development and sales-based milestone payments of up to approximately $89.0 million, subject to foreign currency exchange rates, and a meaningful double-digit share of product revenue. Nippon Shinyaku will be responsible for the distribution of deramiocel in Japan. Capricor will be responsible for the conduct of clinical development and regulatory approval in Japan, as may be required, as well as the

Current wording

Under the terms of the Japan Distribution Agreement, Capricor received an upfront payment of $12.0 million in the first quarter of 2023 and in addition, Capricor will potentially receive additional development and sales-based milestone payments of up to approximately $89.0 million, subject to foreign currency exchange rates, and a meaningful double-digit share of product revenue. Nippon Shinyaku will be responsible for the distribution of Deramiocel in Japan. Capricor will be responsible for the conduct of clinical development and regulatory approval in Japan, as may be required, as well as the manufacturing of Deramiocel. Subject to regulatory approval, Capricor or its designee will hold the Marketing Authorization in Japan if the product is approved in that territory.

Previous wording

On October 16, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Piper Sandler and Oppenheimer as representatives of the underwriters (the “Underwriters”), pursuant to which the Company agreed to sell and issue, in a public offering, an aggregate of 5,073,800 shares of common stock, including the exercise in full of the underwriters’ option to purchase additional shares to cover over allotments, at a public offering price of $17.00 per share for total gross proceeds of approximately $86.3 million, before deducting underwriting commissions and other offering expenses payable by the Company. The Company paid cash commissions on the gross proceeds, plus reimbursement of expenses to the Underwriters, as well as legal and accounting fees in the aggregate amount of approximately $5.4 million.

Current wording

Company agreed to sell and issue, in a public offering, an aggregate of 5,073,800 shares of common stock, including the exercise in full of the underwriters’ option to purchase additional shares to cover over allotments, at a public offering price of $17.00 per share for total gross proceeds of approximately $86.3 million, before deducting underwriting commissions and other offering expenses payable by the Company. The Company paid cash commissions on the gross proceeds, plus reimbursement of expenses to the Underwriters, as well as legal and accounting fees in the aggregate amount of approximately $5.4 million.

Previous wording

On June 21, 2021, the Company initiated an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $75.0 million (the “ATM Program”), with the common stock to be distributed at the market prices prevailing at the time of sale. The ATM Program was established under a Common Stock Sales Agreement (the “Sales Agreement,”), with H.C. Wainwright & Co. LLC (“Wainwright”), under which the Company issued and sold shares of our common stock through Wainwright as sales agent. The Sales Agreement provided that Wainwright would be entitled to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold. All shares issued pursuant to the ATM Program were issued pursuant to our shelf registration statement on Form S-3 (File No. 333-254363), which was initially filed with the Securities and Exchange Commission (the “SEC”), on March 16,

Current wording

On June 21, 2021, the Company initiated an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $75.0 million (the “June 2021 ATM Program”), with the common stock to be distributed at the market prices prevailing at the time of sale. The ATM Program was established under a Common Stock Sales Agreement (the “Sales Agreement,”), with H.C. Wainwright & Co. LLC (“Wainwright”), under which the Company issued and sold shares of our common stock through Wainwright as sales agent. The Sales Agreement provided that Wainwright would be entitled to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold. All shares issued pursuant to the June 2021 ATM Program were issued pursuant to our shelf registration statement on Form S-3 (File No. 333-254363), which was initially filed with the Securities and Exchange Commission (the “SEC”), on March 16, 2021, amended on June 15, 2021 and declared effective by the SEC on June 16, 2021. From June 21, 2021 through October 1, 2024, the Company sold an aggregate of 9,228,383 shares of common stock under the June 2021 ATM Program at an average price of approximately $8.13 per share for gross proceeds of approximately $75.0 million which represents all amounts that were available to be sold. Effective October 1, 2024, the June 2021 ATM Program was closed and terminated. The Company paid cash commissions on the gross proceeds, plus reimbursement of expenses to Wainwright, as well as legal and accounting fees, in the aggregate amount of approximately $2.4 million.

Previous wording

On February 26, 2025, Capricor notified CIRM of its election to convert the CIRM Award into a loan. As a result, certain requirements of the CIRM Award will no longer be applicable, including the revenue sharing requirements. The terms of the loan agreement are currently under discussion with CIRM. Depending on the results of these discussions, accrued interest on the CIRM Award could reach up to approximately $7.1 million and may continue to accrue over time until the final payout. There was no accrued interest recorded as of June 30, 2025.

Current wording

On February 26, 2025, Capricor notified CIRM of its election to convert the CIRM Award into a loan. As a result, certain requirements of the CIRM Award will no longer be applicable, including the revenue sharing requirements. The terms of the loan agreement are currently under discussion with CIRM. Depending on the results of these discussions, accrued interest on the CIRM Award could reach up to approximately $7.9 million and may continue to accrue over time until the final payout. This estimate is dependent on many factors, some of which have yet to be determined. There was no accrued interest recorded as of September 30, 2025.

Previous wording

Our financial statements are prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis, including research and development and clinical trial accruals, and stock-based compensation estimates. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. We believe the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our financial statements and accompanying notes.

Current wording

Our financial statements are prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis, including research and development and clinical trial accruals, and stock-based compensation estimates. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. We believe the following critical accounting policies

Previous wording

The revenue standard provides a five-step framework for recognizing revenue as control of promised goods or services is transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that it determines are within the scope of the revenue standard, the Company performs the following five steps: (i) identify the contract; (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. At contract inception, the Company assesses whether the goods or services promised within each contract are distinct and, therefore, represent a separate performance obligation, or whether they are not distinct and are combined with other goods and services until a distinct bundle is identified. The Company then determines the transaction price, which typically includes upfront payments and any variable consideration that the Company determines is probable to not cause a

Current wording

The revenue standard provides a five-step framework for recognizing revenue as control of promised goods or services is transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that it determines are within the scope of the revenue standard, the Company performs the following five steps: (i) identify the contract; (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. At contract inception, the Company assesses whether the goods or services promised within each contract are distinct and, therefore, represent a separate performance obligation, or whether they are not distinct and are combined with other goods and services until a distinct bundle is identified. The Company then determines the transaction price, which typically includes upfront payments and any variable consideration that the Company determines is probable to not cause a significant reversal in the amount of cumulative revenue recognized when the uncertainty associated with the variable consideration is resolved. The Company then allocates the transaction price to each performance obligation and recognizes the associated revenue when, or as, each performance obligation is satisfied.

Previous wording

The Company’s distribution agreements may entitle it to additional payments upon the achievement of milestones or shares of product revenue. The milestones are generally categorized into two types: development milestones and sales-based milestones. The Company evaluates whether it is probable that the consideration associated with each milestone or shared revenue payments will not be subject to a significant reversal in the cumulative amount of revenue recognized. Amounts that meet this threshold are included in the transaction price using the most likely amount method, whereas amounts that do not meet this threshold are excluded from the transaction price until they meet this threshold. At the end of each subsequent reporting period, the Company re-evaluates the probability of a significant reversal of the cumulative revenue recognized for its milestones and shared revenue payments, and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income (loss) in the Company’s condensed consolidated statements of operation and comprehensive loss. Typically, milestone payments and shared revenue payments are achieved after the Company’s performance obligations associated with the distribution agreements have been completed and after the customer has assumed responsibility for the respective clinical program. Milestones or shared revenue payments achieved after the Company’s performance obligations have been completed are recognized as revenue in the period the milestone or shared revenue payments was achieved. If a milestone payment is achieved during the performance period, the milestone payment would be recognized as revenue to the extent performance had been completed at that point, and the remaining balance would be recorded as deferred revenue.

Current wording

Amounts that meet this threshold are included in the transaction price using the most likely amount method, whereas amounts that do not meet this threshold are excluded from the transaction price until they meet this threshold. At the end of each subsequent reporting period, the Company re-evaluates the probability of a significant reversal of the cumulative revenue recognized for its milestones and shared revenue payments, and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income (loss) in the Company’s condensed consolidated statements of operation and comprehensive loss. Typically, milestone payments and shared revenue payments are achieved after the Company’s performance obligations associated with the distribution agreements have been completed and after the customer has assumed responsibility for the respective clinical program. Milestones or shared revenue payments achieved after the Company’s performance obligations have been completed are recognized as revenue in the period the milestone or shared revenue payments was achieved. If a milestone payment is achieved during the performance period, the milestone payment would be recognized as revenue to the extent performance had been completed at that point, and the remaining balance would be recorded as deferred revenue.

Previous wording

clinical study sites, laboratories, consultants or other clinical trial vendors that perform activities in connection with a trial. Related contracts vary significantly in length and may be for a fixed amount, a variable amount based on actual costs incurred, capped at a certain limit, or for a combination of fixed, variable and capped amounts. Activity levels are monitored through close communication with the CROs and other clinical trial vendors, including detailed invoice and task completion review, analysis of expenses against budgeted amounts, analysis of work performed against approved contract budgets and payment schedules, and recognition of any changes in scope of the services to be performed. Certain CRO and significant clinical trial vendors provide an estimate of costs incurred but not invoiced at the end of each quarter for each individual trial. These estimates are reviewed and discussed with the CRO or vendor as necessary, and are included in R&D expenses for the related period. For clinical study sites which are paid periodically on a per-subject basis to the institutions performing the clinical study, we accrue an estimated amount based on subject screening and enrollment in each quarter. All estimates may differ significantly from the actual amount subsequently invoiced, which may occur several months after the related services were performed.

Current wording

Our cost accruals for clinical trials and other R&D activities are based on estimates of the services received and efforts expended pursuant to contracts with numerous clinical trial centers and contract research organizations (“CROs”), clinical study sites, laboratories, consultants or other clinical trial vendors that perform activities in connection with a trial. Related contracts vary significantly in length and may be for a fixed amount, a variable amount based on actual costs incurred, capped at a certain limit, or for a combination of fixed, variable and capped amounts. Activity levels are monitored through close communication with the CROs and other clinical trial vendors, including detailed invoice and task completion review, analysis of expenses against budgeted amounts, analysis of work performed against approved contract budgets and payment schedules, and recognition of any changes in scope of the services to be performed. Certain CRO and significant clinical trial vendors provide an estimate of costs incurred but not invoiced at the end of each quarter for each individual trial. These estimates are reviewed and discussed with the CRO or vendor as necessary, and are included

Previous wording

payment flows that do not match the periods over which materials or services are provided to us under such contracts. Our objective is to reflect the appropriate clinical trial expenses in our condensed consolidated financial statements by matching the appropriate expenses with the period in which services are provided and efforts are expended. We account for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. We determine accrual estimates through financial models that take into account discussions with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our estimates. We make estimates of our accrued expenses as of each balance sheet date in our condensed consolidated financial statements based on the facts and circumstances known to us at that time. Our clinical trial accrual and prepaid assets are dependent, in part, upon the receipt of timely and accurate reporting from CROs and other third-party vendors. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low for any particular period.

Current wording

As part of the process of preparing our condensed consolidated financial statements, we are required to estimate our accrued expenses. Our clinical trial accrual process is designed to account for expenses resulting from our obligations under contracts with vendors, consultants, CROs and clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to us under such contracts. Our objective is to reflect the appropriate clinical trial expenses in our condensed consolidated financial statements by matching the appropriate expenses with the period in which services are provided and efforts are expended. We account for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. We determine accrual estimates through financial models that take into account discussions with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our estimates. We make estimates of our accrued expenses as of each balance sheet date in our condensed consolidated financial statements based

Previous wording

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.

Current wording

In November 2024, the FASB issuedASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.