Tectonic Therapeutic, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. The following discussion contains forward-looking statements that are based upon current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk Factors” and elsewhere in this Quarterly Report. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. The following discussion contains forward-looking statements that are based upon current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk Factors” and elsewhere in this Quarterly Report. Please also see the section titled “Cautionary Note Regarding Forward-Looking Statements.”

Previous wording

Our lead asset, TX45, is an Fc-relaxin fusion molecule that activates the RXFP1 receptor, the GPCR target of the hormone, relaxin. We are currently evaluating TX45 in a Phase 1b Part B hemodynamic clinical trial and in the APEX Phase 2 clinical trial.

Current wording

Our lead product candidates are TX45, an Fc-relaxin fusion molecule that activates the RXFP1 receptor, the GPCR target of the hormone relaxin, and TX2100, a VHH-Fc fusion antagonist antibody that binds to an undisclosed GPCR target.

Previous wording

The ongoing APEX Phase 2 clinical trial is a global, 24-week, placebo-controlled trial designed to evaluate the safety and efficacy of TX45 administered subcutaneously (“SC”) in subjects with PH-HFpEF, enriched for CpcPH. We dosed our first subject in the APEX Phase 2 clinical trial in October 2024. Subjects are being randomized to 300 mg SC (2 ml injection) once monthly of TX45, 300 mg SC once every other week of TX45, or placebo. We expect topline results from the APEX clinical trial in 2026.

Current wording

The ongoing APEX Phase 2 clinical trial is a global, 24-week, placebo-controlled trial designed to evaluate the safety and efficacy of TX45 administered subcutaneously (“SC”) in subjects with PH-HFpEF, enriched for CpcPH. We dosed our first subject in the APEX Phase 2 clinical trial in October 2024. Subjects are being randomized to 300 mg SC (2 ml injection) once monthly of TX45, 300 mg SC once every other week of TX45, or placebo. Change from baseline in PVR in the PVR>3 population is the primary endpoint of the trial. The trial is designed to enrich for patients with a PVR>3 aiming for 70% of patients enrolled. We expect topline results from the APEX clinical trial in 2026.

Previous wording

In 2026, we plan to initiate a 16-week, open label, repeat dose, Phase 2 clinical trial to evaluate TX45’s safety and hemodynamic effects in approximately 20 subjects with PH associated with Interstitial Lung Disease (“ILD”), known as PH-ILD (Group 3 PH). PH-ILD is an orphan disease with limited treatment options and a high mortality rate. We believe TX45’s mechanism is well suited to PH-ILD’s disease pathophysiology because of its pulmonary vasodilation, anti-inflammatory, remodeling and anti-fibrotic activity. In patients with PH-ILD, elevation in PVR and mean pulmonary arterial pressure

Current wording

In 2026, we plan to initiate a 16-week, open label, repeat dose, Phase 2 clinical trial to evaluate TX45’s safety and hemodynamic effects in up to 25 subjects with PH associated with Interstitial Lung Disease (“ILD”), known as PH-ILD (Group 3 PH). PH-ILD is an orphan disease with limited treatment options and a high mortality rate. We believe TX45’s mechanism is well suited to PH-ILD’s disease pathophysiology because of its pulmonary vasodilation, anti-inflammatory, remodeling and anti-fibrotic activity. In patients with PH-ILD, elevation in PVR and mean pulmonary arterial pressure (“mPAP”) has been associated with increased mortality. The TX45 PH-ILD Phase 2 trial is being initiated at a dose of TX45 300 mg every four weeks administered SC with a primary efficacy endpoint of change from baseline in PVR at Week 16.

Previous wording

We are also evaluating TX002100 (“TX2100”) as our second development candidate for the treatment of Hereditary Hemorrhagic Telangiectasia (“HHT”), the second most common genetic bleeding disorder with no approved therapy. TX2100 is a VHH-Fc fusion antagonist antibody that binds to an undisclosed GPCR target (“GPCR3”) which plays a key role in pathogenic angiogenesis. A rodent surrogate of TX2100 demonstrated reduced arteriovenous malformation development and bleeding in an animal model of HHT. A 4-week non-human primate dose-range study with a functionally equivalent precursor to TX2100 showed no treatment-related toxicity observed at doses up to 100 mg/kg. A formulation supporting TX2100 SC dosing has been identified. Both IND-enabling NHP GLP toxicology studies and technical development activities to generate GMP drug supply and drug product for TX2100 started in the second quarter of 2025. We expect to initiate a Phase 1 clinical trial in healthy volunteers for TX2100 in the first quarter of 2026 subject to the conclusion of IND-enabling studies. In addition, subject to positive Phase 1 data, we plan to initiate a Phase 2 clinical trial for TX2100 in early 2027.

Current wording

Our second product candidate, TX2100, is being evaluated for the treatment of Hereditary Hemorrhagic Telangiectasia (“HHT”), the second most common genetic bleeding disorder with no approved therapy. TX2100 is a VHH-Fc fusion antagonist antibody that binds to an undisclosed GPCR target (“GPCR3”) which plays a key role in pathogenic angiogenesis. A rodent surrogate of TX2100 demonstrated reduced arteriovenous malformation development and bleeding in an animal model of HHT. A 4-week non-human primate dose-range study with a functionally equivalent precursor to TX2100 showed no treatment-related toxicity observed at doses up to 100 mg/kg. A formulation supporting TX2100 SC dosing has been identified. Technical development activities to generate GMP drug supply and drug product for TX2100 started in the second quarter of 2025. The in-life portion of the IND-enabling NHP GLP toxicology studies are now complete. We expect to initiate a Phase 1 clinical trial in healthy volunteers for TX2100 in the first quarter of 2026. In addition, subject to positive Phase 1 data, we plan to initiate a Phase 2 clinical trial for TX2100 in early 2027.

Previous wording

per patient trial costs, including based on the number of doses that patients received;

Current wording

per patient trial costs, based on the number of doses that patients received;

Previous wording

We anticipate that our general and administrative expenses will increase in the future as we expect to incur increased accounting, audit, information technology, legal, regulatory, compliance, director and officer insurance, and investor and public relations expenses associated with operating as a public company. We also expect to incur additional intellectual property-related expenses as we file patent applications to protect innovations arising from our research and development activities.

Current wording

We anticipate that our general and administrative expenses will continue to increase in the future as we expect to incur increased accounting, audit, information technology, legal, regulatory, compliance, director and officer insurance, and investor and public relations expenses associated with operating as a public company. We also expect to incur additional intellectual property-related expenses as we file patent applications to protect innovations arising from our research and development activities.

Previous wording

During the three and six months ended June 30, 2025, the Company recorded a tax expense of approximately $0.9 million related to the dissolution of its wholly owned Australian subsidiary, Tectonic Therapeutic Pty Ltd. This entity is being dissolved as part of a broader corporate initiative intended to streamline operations and reduce administrative costs. The dissolution triggered a taxable event under Australian tax law due to the deemed disposition of certain assets at fair market value. As a result, the Company recognized a tax liability based on the difference between the carrying amount of these assets for financial reporting purposes and their tax basis. The dissolution does not have a significant impact on the Company’s effective tax rate for the period, but it did result in a discrete item within the quarter. The Company does not expect material ongoing tax consequences from this dissolution.

Current wording

During the nine months ended September 30, 2025, the Company recorded a tax expense of approximately $0.9 million related to the dissolution of its wholly owned Australian subsidiary, Tectonic Therapeutic Pty Ltd. This entity is being dissolved as part of a broader corporate initiative intended to streamline operations and reduce administrative costs. The dissolution triggered a taxable event under Australian tax law due to the deemed disposition of certain assets at fair market value. As a result, the Company recognized a tax liability based on the difference between the carrying amount of these assets for financial reporting purposes and their tax basis. The dissolution does not have a significant impact on the Company’s effective tax rate for the period, but it did result in a discrete item within the period. The Company does not expect material ongoing tax consequences from this dissolution.

Previous wording

Total research and development expenses increased $10.1 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase in research and development expense was primarily the result of increased

Current wording

Total research and development expenses increased $2.6 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase in direct research and development expenses was primarily the result of increased expenses related to the discovery, development and manufacturing of TX2100 and employee-related expenses. Employee-related expenses increased $1.3 million during the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase in employee-related expenses was primarily due to an increase in stock-based compensation expense related to the ongoing issuance of equity awards in 2025 and increase in the weighted-average fair value of the awards granted.

Previous wording

Interest income increased $3.1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to an increase in cash and cash equivalents as a result of the Merger and Private Placement.

Current wording

Interest income increased $0.9 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily due to an increase in cash and cash equivalents as a result of the Private Placement.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024:

Previous wording

The following table summarizes our research and development expenses for the six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes our research and development expenses for the nine months ended September 30, 2025 and 2024:

Previous wording

Total research and development expenses increased $12.3 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The increase in research and development expense was primarily the result of increased CRO and CDMO costs related to the Phase 1b and Phase 2 clinical trials for TX-45 and the discovery, development and manufacturing of TX2100. Employee-related expenses increased $2.4 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase in employee-related expenses was primarily due to an increase in stock-based compensation for newly granted stock-based awards.

Current wording

Total research and development expenses increased $14.9 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The increase in direct research and development expenses was primarily the result of increased CRO and CDMO costs related to the Phase 1b and Phase 2 clinical trials for TX45 and the discovery, development and manufacturing of TX2100. Employee-related expenses increased $3.8 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase in employee-related expenses was primarily due to an increase in stock-based compensation expense as a result of the ongoing issuance of equity awards in 2024 and 2025 and increase in the weighted-average fair value of the awards granted.

Previous wording

The following table summarizes our general and administrative expenses for the six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes our general and administrative expenses for the nine months ended September 30, 2025 and 2024:

Previous wording

General and administrative expenses increased $3.9 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Employee-related expenses increased $2.7 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase in employee-related expenses was primarily due to an increase in stock-based compensation for newly granted stock-based awards. Professional and consulting fees increased $1.4 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to an increase in audit, legal and administrative services to support our operations as a public company.

Current wording

General and administrative expenses increased $3.6 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Employee-related expenses increased $2.5 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase in employee-related expenses was primarily due to an increase in stock-based compensation expense driven by a higher weighted-average grant date fair value of equity awards granted during the period. Professional and consulting fees increased $0.7 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to an increase in administrative services to support our operations as a public company.

Previous wording

Interest income increased $5.3 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to an increase in cash and cash equivalents as a result of the Merger and Private Placement.

Current wording

Interest income increased $6.2 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to an increase in cash and cash equivalents as a result of the Merger and the Private Placement.

Previous wording

We do not currently have any approved products and have never generated any revenue from product sales. We have funded our operations with proceeds from the sale of convertible preferred stock, the issuance of convertible promissory notes, the Merger, and sale of common stock. In February 2025, we sold shares of our common stock in the Private Placement. The net proceeds from the Private Placement were approximately $173.1 million. As of June 30, 2025, we had $287.4 million in cash and cash equivalents and an accumulated deficit of $184.5 million. Based on our current business plans, management believes that our cash and cash equivalents on hand at June 30, 2025 are sufficient to meet our operating requirements for at least the next 12 months from the issuance of the consolidated financial statements included in this Quarterly Report. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we expect.

Current wording

We do not currently have any approved products and have never generated any revenue from product sales. We have funded our operations with proceeds from the sale of convertible preferred stock, the issuance of convertible promissory notes, the Merger, and sale of common stock. In February 2025, we sold shares of our common stock in the Private Placement. The net proceeds from the Private Placement were approximately $173.1 million. As of September 30, 2025, we had $268.4 million in cash and cash equivalents and an accumulated deficit of $203.5 million. Based on our current business plans, management believes that our cash and cash equivalents on hand as of September 30, 2025 are sufficient to meet our operating requirements for at least the next 12 months from the issuance of the consolidated financial statements included in this Quarterly Report. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we expect.

Previous wording

The following table shows a summary of our cash flows for the six months ended June 30, 2025 and 2024:

Current wording

The following table shows a summary of our cash flows for the nine months ended September 30, 2025 and 2024:

Previous wording

During the six months ended June 30, 2025, cash used in operating activities was $27.8 million. Cash used in operating activities was primarily used to fund our operations to develop our product candidates resulting in a net loss of $35.9 million partially offset by non-cash charges of $6.5 million and $1.6 million of changes in operating assets and liabilities related to the timing of the vendor payments.

Current wording

During the nine months ended September 30, 2025, cash used in operating activities was $45.6 million. Cash used in operating activities was primarily used to fund our operations to develop our product candidates resulting in a net loss of $54.9 million and $1.0 million of changes in operating assets and liabilities related to the timing of the vendor payments partially offset by non-cash charges of $10.3 million.

Previous wording

During the six months ended June 30, 2024, cash used in operating activities was $22.7 million. Cash used in operating activities was primarily used to fund our operations to develop our product candidates resulting in a net loss of $27.9 million, and changes in our operating assets and liabilities of $0.4 million, partially offset by non-cash charges of $5.6 million related to the change in the fair value of the SAFE liabilities, depreciation and amortization expense, stock-based compensation expense, and lease expense. The increase in operating assets and liabilities relates to accrued expenses, timing of vendor payments, and timing of lease repayments.

Current wording

During the nine months ended September 30, 2024, cash used in operating activities was $42.3 million. Cash used in operating activities was primarily used to fund our operations to develop our product candidates resulting in a net loss of $45.6 million, and changes in our operating assets and liabilities of $4.7 million related to accrued expenses, timing of vendor payments and lease repayments, partially offset by non-cash charges of $8.0 million.

Previous wording

During the six months ended June 30, 2025 and 2024, net cash provided by investing activities was nominal and related to the purchase and sale of property and equipment.

Current wording

During the nine months ended September 30, 2025 and 2024, net cash used in investing activities was nominal and related to the purchase and sale of property and equipment.

Previous wording

During the six months ended June 30, 2025, net cash provided by financing activities was $174.0 million, primarily due to net proceeds of $173.1 million from the sale of shares pursuant to the Private Placement and $1.2 million in proceeds from the exercise of stock options.

Current wording

During the nine months ended September 30, 2025, net cash provided by financing activities was $173.5 million, primarily due to net proceeds of $173.1 million from the sale of shares pursuant to the Private Placement and $1.2 million in proceeds from the exercise of stock options.

Previous wording

Net cash provided by financing activities during the six months ended June 30, 2024 was $179.1 million, primarily due to net proceeds of $94.6 million from the sale of shares pursuant to the Subscription Agreement, $84.1 million of cash acquired in connection with the Merger, net of transaction costs, and $0.6 million in proceeds from the exercise of stock options.

Current wording

Net cash provided by financing activities during the nine months ended September 30, 2024 was $172.8 million, primarily due to net proceeds of $94.6 million from the sale of shares pursuant to the Subscription Agreement, $77.8 million of net cash acquired in connection with the Merger, and $0.7 million in proceeds from the exercise of stock options.

Previous wording

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue or initiate clinical trials of, and seek marketing approval for, our product candidates including our lead product candidates TX45 and TX2100. In addition, if we obtain marketing approval for TX45, TX2100 or any of our other product candidates, we expect to incur significant commercialization expenses related to program sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Furthermore, we expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

Current wording

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue or initiate clinical trials of, and seek marketing approval for, our product candidates including our lead product candidates TX45 and TX2100. In addition, if we obtain marketing approval for TX45, TX2100 or any of our other product candidates, we expect to incur significant commercialization expenses related to program sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Furthermore, we expect to incur ongoing costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

Previous wording

the costs, timing and outcome of regulatory review of our product candidate;

Current wording

the costs, timing and outcome of regulatory review of our product candidates;

Previous wording

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of product candidates that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

Current wording

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of product candidates that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. Until such time, if ever, we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

Previous wording

We expect to incur additional costs associated with operating as a public company. In addition, we anticipate that we will need substantial additional funding in connection with our continuing operations. Our projections of operating capital requirements are based on our current operating plan, which includes several assumptions that may prove to be incorrect and we may use all of our available capital resources sooner than we expect.

Current wording

We expect to incur ongoing costs associated with operating as a public company. In addition, we anticipate that we will need substantial additional funding in connection with our continuing operations. Our projections of operating capital requirements are based on our current operating plan, which includes several assumptions that may prove to be incorrect and we may use all of our available capital resources sooner than we expect.

Previous wording

We have lease obligations including amounts due on leases of certain laboratory equipment and office and laboratory space under the terms of non-cancelable operating and finance leases. The leases expire at various times through 2027. Minimum lease payments as of June 30, 2025 are $1.5 million in 2025, $0.5 million in 2026, and $0.1 million in 2027. The commitment amounts are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. Such amounts do not include obligations under agreements that we can cancel without a significant penalty.

Current wording

We have lease obligations including amounts due on leases of certain laboratory equipment and office and laboratory space under the terms of non-cancelable operating and finance leases. The leases expire at various times through 2029. Minimum lease payments as of September 30, 2025 are $0.9 million in 2025, $1.7 million in 2026, $1.9 million in 2027, $2.0 million in 2028 and $0.2 million in 2029. The commitment amounts are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. Such amounts do not include obligations under agreements that we can cancel without a significant penalty.