Septerna, Inc.

1. Organization

Description of the Business

Septerna, Inc. (“Septerna” or the “Company”) is a clinical-stage biotechnology company with a world-class team of G protein-coupled receptor (“GPCR”) experts and drug developers advancing cutting-edge science to unlock the full potential of GPCR therapies for patients with significant unmet needs. The Company’s proprietary Native Complex Platform® is designed to enable new approaches to GPCR drug discovery and has led to the development of a diverse pipeline of novel oral small molecule drug candidates. The Company is advancing programs in endocrinology, immunology and inflammation, metabolic diseases and additional therapeutic areas, both independently and with partners.

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

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

Reverse Stock Split

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

Initial Public Offering

In October 2024, the Company completed its initial public offering (“IPO”), pursuant to which it issued and sold an aggregate of 18.4 million shares of its common stock at the IPO price of $18.00 per share, including 2.4 million shares that were issued to the underwriters pursuant to the full exercise of their option to purchase additional shares, resulting in net proceeds of $302.8 million, after deducting underwriting discounts and commissions of $23.2 million, and other offering expenses payable by the Company of $5.2 million. Immediately prior to the closing of the IPO, the Company’s then outstanding convertible preferred stock automatically converted into 22,839,774 shares of common stock.

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

Liquidity and Capital Resources

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

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

For the year ended December 31, 2025, the Company incurred net loss of $48.9 million. The Company had an accumulated deficit of $167.3 million as of December 31, 2025. The Company believes its cash, cash equivalents, and marketable securities of $548.7 million as of December 31, 2025 will be sufficient to fund its operations for, at least, 12 months from the date of issuance of the financial statements.

The Company historically financed its operations primarily through the issuance of convertible promissory notes, convertible preferred stock, the sale of its common stock in an IPO, and most recently, through a one-time, non-refundable upfront payment upon commencement of its collaboration agreement with Novo Nordisk A/S (“Novo”) and achievement of a milestone event pursuant to its agreement with Vertex Pharmaceuticals Incorporated ("Vertex"). The Company expects to continue to generate operating losses for the foreseeable future. The Company will need additional financing to support its continuing operations and pursue its growth strategy. It expects to finance its operations through equity offerings, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. The Company may not be able to obtain funding on acceptable terms, or at all. Any failure to raise capital as and when needed would compromise the Company’s ability to execute on its business plan and may cause the Company to significantly delay, scale back or discontinue the research and development of some of its programs or curtail any efforts to expand its product pipelines and will materially harm its business, financial position and results of operations.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), stated in U.S. dollars and include all adjustments necessary for the fair presentation of the Company’s financial statements as of December 31, 2025 and 2024, and for the years then ended. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification and Accounting Standards Updates(“ASUs”), of the Financial Accounting Standards Board(“FASB”).

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures at the date of the financial statements and reported amounts of expenses during the reporting periods. These estimates form the basis for judgments the Company makes about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company bases its estimates using historical experience, Company forecasts and future plans, current economic conditions, and information from third-party professionals that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities and recorded amounts of expenses that are not readily apparent from other sources and adjusts those estimates and assumptions when facts and circumstances dictate. Estimates are used in determining the fair value of assets and liabilities, the useful lives of property and equipment, the rate used in determining the present value of lease payments, fair value of assets and liabilities, research and development accruals, the estimated fair value of common stock prior to the Company's IPO and assumptions used in stock-based compensation, the initial allocation and continued evaluation of a revenue contract’s transaction price to each distinct performance obligation on a relative standalone selling price basis, uncertain tax positions and the valuation allowance for deferred income tax assets. Actual results may differ from these estimates and assumptions. As appropriate, we assess estimates each period, update them to reflect current information, and will generally reflect any changes in estimates in the period first identified.

The Company’s results can also be affected by economic, political, legislative, regulatory and legal actions. Economic conditions, such as recessionary trends, inflation, interest, tariffs, changes in regulatory laws and monetary exchange rates, and government fiscal policies, can have a significant effect on operations. While the Company maintains reserves for anticipated liabilities, the Company could be affected by civil, criminal, regulatory or administrative actions, claims or proceedings.

Segment Information

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the chief operating decision maker (“CODM”), in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its chief executive officer. Based on the information used by the CODM to allocate resources, the Company has determined it operates in one segment.

Risks and Uncertainties

Financial instruments, which potentially subject the Company to a concentration of credit risk, consist primarily of cash, cash equivalents, marketable securities, and accounts receivable. The Company limits its credit risk by placing its cash, cash equivalents, and marketable securities with banks and institutions that are highly creditworthy. Such cash may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limits, and the Company's cash equivalents and marketable securities are not insured by the FDIC. The Company is exposed to credit risk in the event of default by the financial institutions holding its cash, cash equivalents and marketable securities to the extent recorded in the balance sheet.

The primary focus of the Company’s investment strategy is to preserve capital and meet liquidity requirements. Management believes that the Company is not exposed to significant credit risk due to the high-credit-quality financial institutions in which those deposits are held. The Company has not experienced any losses on its cash, cash equivalents and marketable securities since inception. The Company has no significant off-balance sheet concentrations of credit risk.

The Company is subject to all of the risks inherent in an early-stage biotechnology company. These risks include, but are not limited to, efficacy of product candidates, intense competition, and dependence upon the availability of liquidity to sustain operations.

Cash Equivalents and Marketable Securities

The Company holds marketable securities that consist of highly liquid, investment grade debt securities. The Company's cash and marketable securities are held or issued by financial institutions that management believes are of high credit quality. Marketable securities are classified and accounted for as available-for-sale. Marketable securities with original maturities of 90 days or less are classified as cash equivalents. Marketable securities with original maturities over 90 days and remaining maturities of less than 12 months are classified as current. Marketable securities with remaining maturities of more than 12 months for which the Company has the intent and ability to hold the security for more than 12 months are classified as non-current. The Company’s marketable securities are carried at estimated fair value, which is derived from independent pricing sources based on quoted prices in active markets for similar securities. Unrealized gains and losses are reported in stockholders’ equity as accumulated other comprehensive income. The amortized cost of marketable securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the statements of operations and comprehensive loss.

The Company has the ability, if necessary, to liquidate any of its cash equivalents and marketable securities to meet its liquidity needs in the next 12 months. The Company does not generally intend to sell the investments and it is less likely that it will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

The Company reviews its portfolio of marketable securities, using both quantitative and qualitative factors, to determine if declines in fair value below amortized cost have resulted from a credit-related loss or other factors. If the decline in fair value is due to credit-related factors, the Company recognizes a loss in its statement of operations and comprehensive loss, whereas if the decline in fair value is not due to credit-related factors, the Company records the loss in accumulated other comprehensive income on its balance sheets.

The Company excludes the applicable accrued interest from both the fair value and amortized cost basis of marketable securities for purposes of identifying and measuring an impairment. Accrued interest receivable on marketable securities is recorded within prepaid expenses and other current assets on the balance sheets. The Company’s accounting policy is to not measure an allowance for credit loss for accrued interest receivable and to write-off any uncollectible accrued interest receivable as a reversal of interest income in a timely manner, which is considered to be in the period in which it is determined the accrued interest will not be collected.

Restricted Cash

Restricted cash is comprised of cash that is restricted as to withdrawal or use under the terms of certain contractual agreements. In connection with the Company’s lease agreement (see Note 6), the Company is required to maintain a collateral account to secure a letter of credit issued to its landlord. The collateral account is classified as restricted cash on the Company’s balance sheets. As of

December 31, 2025 and 2024, the remaining term of the leases is greater than one year and the related restricted cash is classified as non-current on the Company's balance sheet.

Deferred Revenue

Deferred revenue consists of amounts received prior to satisfying revenue recognition criteria (see Note 4).

Accounts Receivable

The Company recognizes a receivable when the Company has an unconditional right to payment, which is generally at the time of delivery of assets, or at the time services are rendered.

An allowance for expected credit losses over the life of the receivables is reserved for based on a combination of historical experience, aging analysis, current economic trends and information on specific accounts, with related amounts recorded as a reserve against revenue recognized. The reserve is re-evaluated on a regular basis and adjusted as needed. Once a receivable is deemed to be uncollectible, such balance is charged against the reserve. No allowance for credit losses was recorded during the years ended December 31, 2025 and 2024.

As of December 31, 2025, the Company’s accounts receivable was entirely attributable to Novo. As of December 31, 2024, the Company’s accounts receivable was entirely attributed to Vertex.

Property and Equipment, Net

Property and equipment is recorded at cost, subject to adjustments for impairments, less accumulated depreciation and amortization. The Company depreciates property and equipment using the straight-line method over the estimated useful lives of the respective assets, as follows:

Depreciation or amortization begins at the time the asset is placed in service. Maintenance and repairs that do not improve or extend the life of the respective asset are charged to expense as incurred. Upon disposal of assets, the cost and related accumulated depreciation or amortization is removed from the balance sheet and the resulting gain or loss is recognized within other income, net in the statements of operations and comprehensive loss.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount of each asset to the undiscounted expected future cash flows the asset is expected to generate over its remaining life. An impairment loss would be recognized when the estimated undiscounted future cash flows expected to result from the use of the asset or asset group and its eventual disposition are less than its carrying amount. Impairment, if any, is measured as the amount by which the carrying amount of a long-lived asset or asset group exceeds its fair value. There wereno impairments of the Company’s long-lived assets for the years ended December 31, 2025 and 2024.

Leases

The Company accounts for its leases in accordance with FASB Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”). The Company adopted ASC 842 on January 1, 2021, prior to entering into the lease agreement for its office and research and development space. At inception of a contract, the Company determines whether an arrangement is or contains a lease. For each lease, the Company determines the classification as either an operating lease or a financing lease. Lease recognition occurs at the lease commencement date and lease liability amounts are determined based on the present value of lease payments over the lease term. The lease term may include options to extend or terminate the lease only when it is reasonably certain that the Company will exercise that option.

The Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments if the Company’s leases do not provide an implicit rate. The Company determines its incremental borrowing rate based on the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Right-of-use assets represent the Company’s right to use underlying assets for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments under the lease. Right-of-use assets also include any lease payments made prior to the commencement date and exclude lease incentives received.

The Company elected to apply the practical expedient of combining lease and non-lease components for the real estate lease asset class. Fixed lease payments on operating leases are recognized as lease expense over the expected term of the lease on a straight-line basis. Variable lease expenses that are not considered fixed are recognized as incurred.

In addition, the Company elected the short-term lease practical expedient that allows the lessee to not record a lease liability and right-of-use asset for all leases with a term of 12 months or less. See Note 6 for additional information on the Company’s leases.

Revenue Recognition

The Company accounts for revenue in accordance with ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, the Company recognizes revenue when the customer obtains control of the promised goods or services at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following four steps: (i) confirm it has a contract with a customer that creates enforceable rights and obligations; (ii) identify promised products or services to be transferred to a customer; (iii) determine the transaction price, or the amount it expects to receive, including an estimate of uncertain amounts subject to a constraint to ensure revenue is not recognized in an amount that would result in a significant reversal upon resolution of the uncertainty, is determinable and allocated to the performance obligations; and (iv) recognize revenue when or as performance obligations are satisfied.

Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. To the extent a contract includes multiple promised goods and services, the Company applies judgment to determine whether promised goods and services are both capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation. For arrangements that include multiple performance obligations, the Company allocates the transaction price to the identified performance obligations based on the standalone selling price of each distinct performance obligation. In instances where standalone selling price is not directly observable, the Company develops assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract using a cost plus margin approach, which is an estimation method used when standalone selling price is not directly observable. Key assumptions used within this estimation method may include full-time equivalent personnel effort and estimated external costs associated with the performance obligation.

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in management’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation.

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized over time if either (i) the customer simultaneously receives and consumes the benefits provided by the Company's performance, (ii) the Company's performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) the Company's performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date. If the Company does not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring the control of a promised good or service to a customer.

The Company’s revenues are primarily derived through its license and research and development service arrangements. Payments to the Company under these arrangements typically include one or more of the following: one-time, non-refundable upfront payment, research and development service funding, milestone and other contingent payments to the Company for the achievement of defined collaboration objectives and certain collaboration, research and development and commercial milestones, as well as royalties based on net sales of approved drugs.

Consideration received prior to revenue recognition is recorded as deferred revenue in the balance sheets. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current portion of deferred revenue in the accompanying balance sheets. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, non-current. Contract assets represent research and development services which have been performed but have not yet been billed and are reduced when they are subsequently billed. Such contract assets include accounts receivable when the Company’s right to consideration is unconditional. For its current contracts, the Company recognizes revenue as the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied at a point in time or over time, and, if over time, revenue recognized is based on the use of an input method.

When no remaining performance obligations are required of the Company, or following the completion of the performance obligation period, such amounts are recognized as revenue upon transfer of control of the goods or services to the customer.

The terms of the Company’s collaborative arrangements include one or more of the following

(i)

Licenses of intellectual property, or IP -If the license to the Company’s IP is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from consideration allocated to the license when the license is transferred to the customer and the customer can use and benefit from the licenses. For a license that is determined not to be distinct, it is combined with other promises and the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company generally recognizes revenue using the cost incurred to date as compared to the total estimated cost of each performance obligation. The impact on revenue of changes in total estimated costs are recognized on a cumulative basis in the period that the change occurs. If estimates of the total cost change, or if contract amendments change the scope of the performance obligation, the required adjustments to revenue could be material.

(ii)

Customer options - The Company evaluates the customer options for material rights or options to acquire additional goods or services at no incremental consideration or at a discount. If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement. The Company allocates the transaction price to material rights based on the relative standalone selling price, which is determined based on the identified discount and the probability that the customer will exercise the option. Amounts allocated to a material right are not recognized as revenue until the option is exercised and performance obligations are satisfied. If an option is not exercised before the option right expires, the Company will accelerate and recognize all remaining revenue related to the material right performance obligation.

(iii)

Research and development services- The promises under the Company's collaboration agreement include research and development services to be performed by the Company for or on behalf of the customer. Payments or reimbursements resulting from the Company's research and development efforts are recognized as the services are performed and presented on a gross basis because the Company is the principal for such efforts. Reimbursements are recognized in revenue in the Company’s statements of operations and comprehensive loss. Expenses incurred as part of the Company’s efforts to perform the research and development services are recognized in research and development expense in the Company’s statements of operations and comprehensive loss.

(iv)

Manufacturing services- The promises under the Company's collaboration agreement include manufacturing services to be provided by the Company. Payments or reimbursements resulting from the Company's manufacturing services are recognized as the services are performed and presented on a gross basis because the Company is the principal for such efforts. Reimbursements are recognized in revenue in the Company’s statements of operations and comprehensive loss. Expenses incurred to perform the manufacturing services are recognized in research and development expense in the Company’s statements of operations and comprehensive loss.

(v)

Milestone payments- At the inception of each arrangement that includes development or regulatory milestone payments, the Company evaluates the probability of reaching the milestones and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur in the future, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control or the licensee’s, such as regulatory approvals, are not considered probable of being achieved until those approvals are received, and therefore, consideration included in the transaction price is constrained. The Company applied the variable consideration allocation exception under ASC 606 whereby variable milestone payments are not estimated and included in the transaction price at inception. The transaction price is then allocated to each performance obligation on a relative standalone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, 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 earnings in the period of adjustment.

(vi)

Commercial milestone payments and royalties - For arrangements that include sales-based royalties, including milestone payments based on levels of sales, if the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied)

Sale of Non-Financial Assets

Sale of non-financial assets that are outside the scope of the Company’s ordinary activities are accounted for under ASC 610-20, Other Income - Gains and Losses from the Derecognition of Non-financial Assets (“ASC 610-20”). Pursuant to ASC 610-20, the Company applies the guidance in ASC 606, Revenue from Contracts with Customers(“ASC 606”), to determine if a contract exists, identify the distinct non-financial assets, and determine when control transfers and, therefore, when to derecognize the non-financial asset. Additionally, the Company applies the measurement principles of ASC 606 to determine the amount of consideration, if any, to include in the calculation of the gain or loss for the non-financial asset.

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development expenses consist primarily of employee-related costs, including salaries, benefits and stock-based compensation for employees engaged in research and development activities, costs related to research activities, preclinical studies and clinical trials, contract manufacturing for the production of clinical and preclinical materials, information technology-related costs, allocated overhead costs including facility-related expenses, consulting fees, costs related to laboratory operations and fees paid to other entities that conduct certain research and development activities on the Company’s behalf. Payments made prior to the receipt of goods and services to be used in research and development are deferred and recognized as expense in the period in which the related goods are received or services are rendered.

The Company has entered into agreements with outsourced contract manufacturing and development and clinical research vendors. The Company estimates accrued research and development expenses as of each balance sheet date based on facts and circumstances known at that time. The Company periodically confirms the accuracy of its estimates with internal management personnel and external service providers, and makes adjustments, if necessary. Research and development accruals are estimated based on the level of services performed, progress of the studies, including the phase or completion of events, and contracted costs. The estimated costs of research and development services provided, but not yet invoiced, are included in accrued expenses on the balance sheets. If the actual timing of the performance of services or the level of effort varies from the original estimates, the Company will adjust the accrual accordingly. Payments made under these arrangements in advance of the performance of the related services are recorded as prepaid expenses and other current assets until the services are rendered.

Patent Expenses

Costs to secure and maintain patents covering the Company’s technology and product candidates are expensed as incurred and are classified as general and administrative expenses in the statements of operations and comprehensive loss.

Fair Value Measurements

Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

Fair Value of Financial Instruments

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which to transact and the market-based risk. The carrying values of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, approximate their fair values due to their relatively short maturities.

Stock-Based Compensation

Stock-based compensation expense is recognized based on the grant-date fair value of the awards. The fair value of stock options and employee stock purchase plan ("ESPP") is determined using the Black-Scholes option pricing model on the date of grant. The fair value of restricted stock awards is determined using the estimated fair value of the Company’s common stock on the date of grant.

Prior to the IPO, the Company utilized estimates and assumptions in determining the fair value of its common stock, including stock-based awards. The Company has granted stock options at exercise prices that represented the fair value of its common stock on the specific grant dates. The Company utilized various valuation methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common stock. Each valuation methodology includes estimates and assumptions that require the Company’s judgment. These estimates and assumptions include a number of objective and subjective factors, including external market conditions, the prices at which the Company sold shares of convertible preferred stock, the superior rights and preferences of the convertible preferred stock senior to the Company’s common stock at the time, and a probability analysis of various liquidity events, such as a public offering or sale of the Company, under differing scenarios.

For stock-based awards with service conditions only, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period, which is generally the vesting term of the award of four years. For stock-based awards with vesting criteria subject to the achievement of performance-based conditions, in addition to service conditions, the Company recognizes stock-based compensation expense on an accelerated basis over the vesting period when achievement of the performance criteria becomes probable.

Stock-based compensation expense is recorded within research and development and general and administrative expenses in the accompanying statements of operations and comprehensive loss based on the function to which the related services are provided. The Company recognizes stock-based compensation expense for the portion of awards that have vested. Forfeitures are accounted for as they occur.

Income Taxes

The Company utilizes the asset and liability approach to account for income taxes. Under this method, deferred income tax assets and liabilities are recorded based on the estimated future tax effects of differences between the financial statement and income tax basis of existing assets and liabilities. Deferred tax assets and liabilities are determined based upon the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and for loss and credit carryforwards, using enacted tax rates expected to be in effect in the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions recognized in the financial statements by prescribing a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related interest and penalties.

Comprehensive Loss

Comprehensive loss is defined as a change in equity of a business enterprise during a period resulting from transactions from non-owner sources. The Company’s other comprehensive income (loss) is comprised solely of unrealized gains or losses on marketable securities. The Company has not recorded any reclassifications from other comprehensive gains or losses to net loss during the years ended December 31, 2025 and 2024.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration of potential dilutive securities. Vested restricted stock is treated as outstanding for accounting purposes. Unvested restricted stock is not considered to be outstanding for purposes of the calculation of basic net loss per share. Diluted net loss per share is computed by dividing the net loss by the sum of the weighted-average number of common shares outstanding during the period plus the potential dilutive effects of potential dilutive shares outstanding during the period. Potential dilutive securities include stock options, unvested restricted stock, and ESPP shares. The dilutive effect of stock options, unvested restricted stock, and ESPP shares is computed using the treasury stock method. For all periods presented in a net loss position, diluted net loss per share is the same as basic net loss per share since the effect of including potential dilutive securities is anti-dilutive.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In September 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606). The guidance refines the scope of Topic 815 by clarifying which contracts are subject to derivative accounting and expand the scope exception for certain contracts not traded on an exchange to include contracts for which settlement is based on operations or activities specific to one of the parties to the contract. In addition, ASU 2025-07 is expected to reduce diversity in the accounting for share-based non-cash consideration from a customer for the transfer of goods or services, as well as provide investors with more comparable information and reduce accounting complexity and related reporting costs. Adoption of the amendment allows for either the prospective or modified retrospective application and is effective for annual periods beginning after December 15, 2026, with early adoption permitted. The Company early adopted this standard using the prospective method for the derivative scope refinement with the effective date of January 1, 2025. Prior to adoption, the Company did not have contracts that include are subject to derivative accounting and the adoption of the ASU didnot have a material impact on its financial statements.

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

Recently Issued Accounting Pronouncements Not Yet Adopted

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

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset in developing reasonable and supportable forecasts during the application of the current expected credit loss model for current accounts receivable and current contract assets arising from transactions under ASC 606. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-05.

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

Emerging Growth Company Status and Smaller Reporting Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

The Company is also a smaller reporting company as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company may continue to be a smaller reporting company even after it is no longer an emerging growth company. The Company may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as its voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of its second fiscal quarter, or its annual revenue is less than $100.0 million during the most recently completed fiscal year and its voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of its second fiscal quarter.

3. Balance Sheet Components

Prepaid Expenses and Other Current Assets

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

Property and Equipment, Net

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

Depreciation and amortization expense was $1.6 million and $1.4 million for the years ended December 31, 2025 and 2024, respectively.

Accrued Expenses and Other Current Liabilities

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

4. Collaboration and Research Service Agreements

For the year ended December 31, 2025, the Company's revenue is comprised solely of arrangements with Novo and Vertex. For the year ended December 31, 2024, the Company's revenue was solely comprised of the arrangement with Vertex.

Novo Collaboration Agreement

On May 13, 2025, the Company entered into a Collaboration and License Agreement with Novo (the “Novo Collaboration Agreement”). Under the Novo Collaboration Agreement, the Company and Novo are exclusively collaborating to leverage the Company’s proprietary Native Complex Platform™ to discover, develop and commercialize multiple potential oral small molecule therapies for metabolic-related diseases based on certain specified molecular targets.

Upon effectiveness of the Novo Collaboration Agreement on July 1, 2025, the Company and Novo have commenced four simultaneous research and development programs (each an “R&D Program”), each pursuing one or more Collaboration Targets (as defined in the Novo Collaboration Agreement) from discovery through development candidate selection. Subject to certain limitations, Novo also has a right to modify the research plan with the option to commence additional R&D Programs. Novo will reimburse the Company for 100% of the fully burdened costs arising from all research and development activities undertaken by the Company under the Novo Collaboration Agreement. After development candidate selection, beginning with investigational new drug-enabling activities, Novo will be responsible for all further global development and commercialization for each product candidate at its sole cost and expense unless the profit share option described below is exercised. Novo is also responsible for all commercialization costs subject to the Company’s profit share option for up to one program under the Novo Collaboration Agreement. Pursuant to the terms of the Novo Collaboration Agreement, the Company will provide Novo with exclusive licenses to enable Novo to develop and commercialize products directed at the Collaboration Targets. The Company retains all other rights to its Native Complex Platform™ and all of the Company’s other research and development programs.

Upon effectiveness of the Novo Collaboration Agreement, the Company received a one-time, non-refundable upfront payment of $195.0 million in July 2025, which was recorded as deferred revenue in its balance sheet. The Company is also eligible to receive up to approximately $498.0 million in research, development, regulatory, and commercial milestone payments for each R&D Program. In addition, the Company is entitled to escalating, tiered royalties ranging from mid to high single-digits based on global product sales on a country-by-country and product-by-product basis with respect to a R&D Program until the later of ten years after the date of first commercial sale of the first product in such R&D Program in such country, expiration of specified patent rights covering such product in such country or the expiration of specified regulatory exclusivity for the first product in such R&D Program in such country.

Under the Novo Collaboration Agreement, the Company has a one-time option to share in the global development costs and operating profits or losses (in lieu of milestones and royalties) with respect to one licensed product (the "Profit Share Option"), subject to certain terms, conditions and limitations. In the event that the Company chooses to exercise the Profit Share Option, it will be required to repay Novo all previously reimbursed developmental costs pertaining to that program at a predetermined multiple and reimburse Novo for a portion of the continued R&D costs incurred under the selected licensed product and will share in the profits resulting from the commercialization of the licensed product.

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

The Company concluded the Agreement is not within the scope of Accounting Standards Codification 808, Collaborative Arrangementsas the Company does not share equally in the exposure to significant risk. Accordingly, the Company assessed this arrangement in accordance with ASC 606 and concluded that the contract counterparty, Novo, is a customer.

At commencement, the Company identified the several performance obligations within the Novo Collaboration Agreement, including research and development services on research targets, option rights held by Novo, license to use the Company’s intellectual property to conduct research and development activities, and participation on the joint steering committee (“JSC”). At inception of the Novo Collaboration Agreement, the Company identified the following performance obligations:

(i)

Four combined performance obligations comprised of the license, related research services, and participation of the JSC for the four R&D Programs;

(ii)

Manufacturing services related to one of the R&D Programs; and

(iii)

A material R&D Program modification right held by Novo.

The Company concluded that the license granted at contract inception is not distinct from the research services as the research services significantly modify the intellectual property underlying the license. As a result, for each R&D Program, the license has been combined with the research services and JSC participation into a single performance obligation, which is the combined performance obligation comprised of the license, related research services, and JSC participation.

In assessing whether the various options under the Novo Collaboration Agreement represent material rights, the Company considered the additional consideration the Company would be entitled to upon option exercise and the standalone selling price of the underlying goods and services. For the material right identified above, the Company concluded the option provided Novo with a discount that it otherwise would not have received.

The Company recognizes revenue related to the combined license and research services performance obligation and the manufacturing performance obligation over time using the input method. Under the input method, the extent of progress towards completion is measured based on the ratio of actual cost incurred to date to the total estimated cost at completion of the performance obligations, which the Company believes best measures its progress towards satisfying the performance obligations. A cost-based input method of revenue recognition requires management to make estimates of cost to complete the performance obligation. Judgment is required to evaluate assumptions related to cost estimates. The estimated standalone selling price for the material right was determined based on the estimated discount provided to Novo and the probability that Novo would exercise the option.

The following table presents revenue recognized, unrecognized transaction price, and estimated revenue expected to be recognized in the future as of December 31, 2025 (in thousands):

(1)

Comprised of the allocation of the $195.0 million one-time, non-refundable upfront payment, of which $153.8 million was allocated to the four R&D programs and manufacturing services and $41.2 million was allocated to the material right and $94.0 million of variable consideration related to estimated research and manufacturing services for the four R&D Programs.

(2)

Recorded within revenue in the statement of operations and comprehensive loss for the year ended December 31, 2025, comprised of $26.8 million recognized of the one-time, non-refundable upfront payment and $18.6 million variable considerations related to estimated research services for the four R&D Programs.

Amounts due to the Company for satisfying the revenue recognition criteria or that are contractually due based upon the terms of the Novo Collaboration Agreement are recorded as accounts receivable in the Company’s balance sheets. Contract liabilities consist of amounts received prior to satisfying the revenue recognition criteria, which are recorded as deferred revenue in the Company’s balance sheets.

The following table summarizes the changes in deferred revenue for the year ended December 31, 2025 (in thousands):

(1)

Comprised of $62.3 million of deferred revenue, current and $105.9 million of deferred revenue, non-current, which is expected to be recognized over 3.5 years. As of December 31, 2025, all of the Company's performance obligations are outstanding.

The Company periodically assesses the probability of receiving payments from achieving the research and development, collaboration target, and regulatory milestones and includes the payment in the transaction price when they are deemed probable. Royalties and commercial sale milestones will be recognized when the subsequent sales occur based on the sales or usage-based royalty exception. The Company also periodically reassesses the probability of exercising Profit Share Option. As of December 31, 2025, none of the milestones were deemed probable and no royalty revenue has been recognized, and the Profit Share Option was deemed improbable with no amount recognized for repayment of reimbursements to Novo.

Vertex Asset Purchase and Research Service Agreement

Vertex Asset Purchase Agreement

In September 2023, the Company entered into an asset purchase agreement with Vertex, under which Vertex acquired an in-process research and development ("IPR&D") asset related to a GPCR program, including all intellectual property, materials, and compounds associated with the program (the “Vertex Asset Purchase Agreement”). The Vertex Asset Purchase Agreement also provided for a potential milestone payment payable to the Company contingent upon the achievement of a milestone event.

In July 2025, this milestone event was determined achieved and, as a result, the Company received a payment of $12.5 million in August 2025, which wasrecorded as a gain on sale of non-financial asset within total operating expenses in the Company’s statements of operations and comprehensive loss for the year ended December 31, 2025. The Company will not receive any other payments related to this IPR&D asset.

Vertex Research Service Agreement

In conjunction with the Vertex Asset Purchase Agreement in September 2023, the Company entered into research service agreement with Vertex under which the Company agreed to perform certain exploratory research activities for Vertex (the "Vertex Research Service Agreement"). The Company recognized service revenue associated with the Vertex Research Service Agreement over the performance period of the research services as the services were provided in accordance with ASC 606. The Vertex Research Service Agreement expired in September 2025.

During the year ended December 31, 2025, the Company recorded revenue of $0.6 million related to research activities performed in connection with the Vertex Research Service Agreement. During the year ended December 31, 2024, the Company recorded revenue of $1.1 million related to research activities performed in connection with the Vertex Research Service Agreement.

5. Marketable Securities and Fair Value Measurements

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

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

Marketable Securities

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

Interest receivable as of December 31, 2025 and 2024 was $3.4 million and $1.0 million, respectively, and is recorded as a component of prepaid expenses and other current assets on the Company’s balance sheets.

As of December 31, 2025, all marketable securities in an unrealized loss position had been in an unrealized loss position for less than 12 months. As of December 31, 2025,44 marketable securities had been in an unrealized loss position for a period of less than 12 months.

As of December 31, 2025, the following table summarizes the amortized cost and the unrealized gains (losses) of the marketable securities presented within marketable securities, marketable securities, non-current and cash equivalents (in thousands).

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

As of December 31, 2025, the following table summarizes marketable securities in an unrealized loss position (in thousands):

6. Leases

Operating Leases

The Company leases office and research and development space at the Company’s headquarters in South San Francisco, California under an operating lease. In April 2021, the Company entered into a lease for 12,560 square feet, set to expire in February 2023. In September 2022, the lease was amended to add 9,348 square feet, totaling 21,908 square feet (the “Original Leased Space”), also expiring in February 2023. In December 2022, the Company entered into another lease amendment to extend the term of the Original Leased Space and added 22,911 square feet (the “Additional Leased Space”). The Company took control of the Additional Leased Space in November 2023, at which point the Company vacated the Original Leased Space to allow the landlord to renovate it.

Renovation of the Original Leased Space was completed in July 2024. Upon completion of the renovation of the Original Leased Space, the lease of the Original Leased Space commenced, resulting in the total leased premises increasing to 44,819 square feet (the “Leased Space”).

The lease term for the Leased Space expires in July 2032, with anoption to extend the lease for eight additional years (the “Extension Option”). As of December 31, 2025 and 2024, it was not probable that the Company would exercise the Extension Option, therefore, it was excluded from the right-of-use asset and lease liability calculations.

During the year ended December 31, 2024, the Company recorded a $12.5 million operating lease right-of-use asset and operating lease liability upon completion of the renovations of the 21,908 square foot office and research and development space (the "Original Leased Space") as the Company occupied the property. These amounts are disclosed in the supplemental information of noncash activities on the statements of cash flows.

The Company is required to pay base rent plus its proportionate share of operating expenses, as defined in the applicable lease agreement on all of its leases. Variable lease payments related to operating expenses including utilities, maintenance costs and real estate taxes were $1.1 million and $0.7 million for the years ended December 31, 2025 and 2024, respectively.

Operating lease expenses, excluding variable lease payments, were $4.7 million and $3.5 million for the years ended December 31, 2025 and 2024, respectively. Short-term lease expense was not material for the periods presented. As of December 31, 2025 and 2024, the weighted average remaining lease term of the Leased Space was 6.6 and 7.6 years, respectively. The weighted average incremental borrowing rate used for the calculation of the present value of lease payments over the lease term was 11.34% for both the years ended December 31, 2025 and 2024.

The following table summarizes the expenses recognized and cash paid for the Leased Space (in thousands):

As of December 31, 2025, future minimum rental payments for operating leases were as follows (in thousands):

As of December 31, 2025 and 2024, the Company did not have any finance leases.

7. Commitments and Contingencies

Legal Proceedings

In the ordinary course of business, the Company may be subject to legal proceedings, claims and litigation, as the Company operates in an industry susceptible to patent or other legal claims. The Company accounts for estimated losses with respect to legal proceedings and claims when such losses are probable and estimable. Legal costs associated with these matters are expensed when incurred. The Company was not subject to any material legal proceedings as of December 31, 2025 and 2024, and the Company is not currently a party to any legal proceeding that, if determined adversely to the Company, in management’s opinion, is currently expected to individually or in the aggregate have a material adverse effect on the Company’s business, financial condition or results of operations taken as a whole.

Indemnifications

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

Themaximum potential amount of future payments that the Company could be required to make under these provisions is not determinable; however, the Company currently holds director and officer liability insurance. This insurance limits the Company’s exposureand may enable it to recover a portion of any future amounts paid. The Company is not currently aware of any indemnification claims. In addition, the Company believes that the fair value of any potential indemnification obligations is minimal. Accordingly, the Company didnot record any liabilities associated with these indemnification rights and agreements as of December 31, 2025 and 2024.

8. Convertible Preferred Stock

Immediately prior to the closing of the Company's IPO in October 2024, the Company’s outstanding convertible preferred stock automatically converted into 22,839,774 shares of common stock. Converted preferred stock outstanding as of the date of the IPO consisted of 196,657,452 shares. Each share of outstanding convertible preferred stock was converted into common stock at a ratio of 8.6103 convertible preferred shares to 1 common share. No shares of convertible preferred stock were authorized, issued or outstanding at December 31, 2025 and 2024.

In November 2021, the Company executed a Series A Convertible Preferred Stock financing arrangement that would provide financing of up to $100.0 million over an initial tranche and subsequent callable tranches through the issuance of up to 100.0 million shares of Series A Convertible Preferred Stock at an issuance price of $1.00 per share. In the initial tranche, the Company issued 45.0 million shares of Series A Convertible Preferred Stock for net proceeds of $44.7 million, of which $30.0 million was received in cash, net of issuance costs, and $14.7 million was for the conversion of the then outstanding convertible promissory notes plus accrued interest. The Series A Convertible Preferred Stock financing arrangement represented an equity financing, per the terms of the outstanding convertible promissory notes, and as such the unpaid principal and accrued interest outstanding of $14.7 million was converted into 14.7 million shares of Series A Convertible Preferred Stock. Additionally, in November 2022, the Company executed the second tranche and issued 30.0 million shares of Series A Convertible Preferred Stock and received net cash proceeds of $30.0 million.

In June 2023, the Company entered into a Series B Convertible Preferred Stock financing arrangement in which 121,657,452 shares of Series B Convertible Preferred Stock were authorized to be issued at an issuance price of $1.23297 per share over two tranches, for total proceeds of up to $150.0 million. In June 2023 and July 2023, the Company issued an aggregate of 60.8 million shares of Series B Convertible Preferred Stock at an issuance price of $1.23297 per share for net proceeds of $74.5 million related to the first tranche, with a potential second tranche of additional funding for up to $75.0 million based on approval of the Board of Directors and consent of the majority of the holders of the then-outstanding Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock Purchase Agreement provides that, upon the fulfillment of certain conditions, each investor will purchase its pro rata portion of the shares to be issued in additional Series B Convertible Preferred Stock closings. Further, the Company agreed to sell, and issue said shares of Series B Convertible Preferred Stock on the same terms as the first tranche in the Purchase Agreement. The Company did not separately account for tranche purchase rights described above as they were not freestanding from the associated shares of convertible preferred stock.

In May 2024, the Company executed the second tranche of the Series B Convertible Preferred Stock financing arrangement and issued the remaining 60.8 million shares of Series B Convertible Preferred Stock for net proceeds of $74.9 million.

9. Common Stock

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

In October 2024, the Company amended and restated its certificate of incorporation, which was filed immediately prior to the closing of its IPO and among other things, increased the number of shares of common stock authorized for issuance to 500.0 million shares of common stock.

In October 2024, the Company completed its IPO of its common stock. In connection with the Company's IPO, the Company issued and sold 18.4 million shares of its common stock, which included an additional 2.4 million shares of common stock that were issued to the underwriters pursuant to the full exercise of their option to purchase additional shares of common stock, at the public offering price of $18.00 per share. As a result, the Company received $302.8 million in net proceeds, after deducting underwriting discounts and commissions and other offering costs payable by the Company of $28.4 million.

The holders of common stock are entitled to dividends when and if declared by the board of directors. The board of directors has not declared any dividends and the Company has not paid any dividends. The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders.

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

10. Stock-Based Compensation

2024 Stock Option and Incentive Plan

In October 2024, the Company's board of directors adopted, and its stockholders approved, the 2024 Stock Option and Incentive Plan (the “2024 Plan”) which became effective on October 25, 2024. The 2024 Plan allows for the issuance of equity-based incentive awards to the Company's officers, employees, directors and consultants.

The 2024 Plan provides that the number of shares reserved and available for issuance under the 2024 Plan will automatically increase on January 1, 2025 and each January 1 thereafter through January 1, 2034 by 5% of the outstanding number of shares of the Company's common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Company's compensation committee.

The 2024 Plan replaced the Septerna, Inc. 2021 Stock Option and Grant Plan (the “2021 Plan”) as the Company’s board of directors determined not to make additional awards under the 2021 Plan following the completion of the IPO. However, the 2021 Plan will continue to govern outstanding equity awards granted thereunder. The shares of common stock underlying any awards under the 2024 Plan and the 2021 Plan that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of stock, expire or are otherwise terminated (other than by exercise) will be added to the shares of the Company's common stock available for issuance under the 2024 Plan.4.3 million and 3.7 million shares remained available for future issuance under the 2024 Plan as of December 31, 2025 and 2024, respectively.

Stock options are governed by stock option agreements between the Company and recipients of stock options. Incentive stock options and nonqualified stock options may be granted under the 2024 Plan at an exercise price of not less than 100% of the fair market value of the common stock on the date of grant, determined by the Compensation Committee of the board of directors. Options become exercisable and expire as determined by the Compensation Committee, provided that the term of the stock options may not exceed ten years from the date of grant.

2021 Stock Option and Grant Plan

In 2021, the Company adopted the 2021 Plan, which authorizes the Company to grant incentive stock options, non-qualified stock options, restricted stock awards, unrestricted stock awards and restricted stock units, to officers, employees, directors, consultants, or other key persons of the Company. The terms of the stock option and restricted stock agreements, including vesting requirements, are determined by the Board of Directors, subject to the provisions of the 2021 Plan. Stock option awards expire 10 years from the grant date, or as otherwise determined by the Board of Directors, or in the case of incentive stock options granted to 10% stockholders, the term is no more than 5 years from the grant date. Additionally, the Company granted and issued restricted stock awards and allowed the recipients to purchase the unvested restricted stock awards at par value per share. The shares issued for unvested restricted stock awards under the 2021 Plan are subject to repurchase by the Company at the original issuance price in the event of the holder’s termination of its relationship with the Company. Consideration received for shares associated with the unvested restricted stock awards is initially recorded as a liability and subsequently reclassified into stockholders’ equity as the related awards vest over the requisite service period.

No shares remained available for future issuance under the 2021 Plan as of December 31, 2025 and 2024 as the 2021 Plan was replaced by the 2024 Plan.

Restricted Stock Awards

The Company granted restricted stock awards from the 2021 Plan and from outside of its stock plans, under the terms of restricted stock purchase agreements and subscription agreements. Unvested shares are subject to repurchase by the Company upon the holder’s termination of its relationship with the Company at the original purchase price. Consideration received for shares associated with the unvested restricted stock awards is initially recorded as a liability and subsequently reclassified into stockholders’ equity as the related awards vest.

The following summarizes restricted stock award activity:

The restricted stock awards generally include a service condition for vesting and vest over four years with a one-year cliff vesting and pro-rata monthly vesting thereafter, but some awards vest over different time periods. In addition, some restricted stock awards include vesting criteria subject to the achievement of performance-based conditions in addition to service conditions (“performance RSAs”). As of December 31, 2025, none of the outstanding and unvested performance RSAs were subject to achievement of performance-based criteria for vesting. The aggregate grant date fair value of shares vested during the year ended December 31, 2025 was $1.3 million. The remaining liability related to restricted stock awards as of December 31, 2025 was not material and was recorded in accrued expenses and other current liabilities on the balance sheet.

Stock Options

The following summarizes stock option activity under the 2024 Plan:

Stock options include a service condition for vesting and generally vest over four years. The aggregate intrinsic values of options outstanding and exercisable were calculated as the difference between the exercise price of the options and the closing market price of the Company’s common stock as of December 31, 2025.

The aggregate grant date fair value of options that vested for the year ended December 31, 2025 was $4.9 million. The options granted in the year ended December 31, 2025 and 2024 had a weighted-average per share grant-date fair value of $9.58 and $6.65, respectively, and a total grant date fair value of $18.3 million and $13.1 million, respectively. The total intrinsic value of stock options exercised during the year ended December 31, 2025 was $2.2 million.

2024 Employee Stock Purchase Plan

In October 2024, the Company's board of directors adopted, and its stockholders approved, the 2024 ESPP. The 2024 ESPP provides that the number of shares reserved and available for issuance will automatically increase on January 1, 2026 and each January 1 thereafter through January 1, 2034, by the lesser of (i)0.4 million shares of common stock, (ii)1%of the outstanding number of shares ofcommon stock on the immediately preceding December 31, or (iii) such lesser number of shares of common stock as determined by the administrator of the 2024 ESPP.

The 2024 ESPP provides eligible employees with an opportunity to purchase common stock from the Company and to pay for their purchases through payroll deductions.

The offering periods begin on May 1 and November 1, will be twenty-four (24) months in duration and include four (4) purchase periods, each purchase period lasting six (6) months. The purchase price will be 85% of the fair market value per share of the Company's common stock on either the offering date, which is the first trading day of the offering period, or the purchase date, which is the last trading day of the purchase period, whichever is less. If the fair market value of a share of the Company's common stock on any purchase date within a particular offering period is less than the fair market value on the start date of that offering period, then the offering period will automatically terminate and the employees in that offering period will automatically be transferred and enrolled in a new offering period which will begin on the next day following such purchase date.

During the year ended December 31, 2025, the Company issued 118,191 shares at a weighted average share price of $6.07 per share. As of December 31, 2025, there were 0.3 million shares available for issuance under the 2024 ESPP.

Stock Option and ESPP Valuation

In determining the fair value of the stock options and ESPP granted, the Company uses the Black-Scholes option pricing model and assumptions discussed below. This model utilizes inputs that are subjective.

Expected Term —The expected term represents the period that the Company’s stock options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term). The Company has very limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The Company will continue to apply this process until a sufficient amount of historical information regarding employee exercise patterns and post-vesting employment termination behavior becomes available.

Expected Volatility —Due to the Company’s limited operating history and lack of company-specific historical volatility as a public company, due to the Company's IPO in October 2024, or implied volatility as a private company, the expected volatility was estimated based on the average volatility for comparable publicly traded biopharmaceutical companies over a period, where available, equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, life cycle stage and area of specialty.

Risk-free Interest Rate —The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the options.

Expected Dividend —The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the near future. Therefore, the Company used an expected dividend yield of zero.

The weighted-average assumptions used to value employee and non-employee stock option awards granted during the years ended December 31, 2025 and 2024, using the Black-Scholes option pricing model, were as follows:

The weighted-average assumptions used to value employee stock purchase plan shares granted during the year ended December 31, 2025, using the Black-Scholes option pricing model, were as follows:

Stock-based Compensation Expense

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

As of December 31, 2025, total unrecognized stock-based compensation expense related to unvested restricted stock awards, stock options, and ESPP was $24.5 million, which is expected to be recognized over a weighted-average period of 2.7 years.

11. Income Taxes

The components of the provision (benefit) for income taxes were as follows for the years ended December 31, 2025 and 2024 (in thousands):

As discussed in Note 2, we adopted ASU 2023-09 on a prospective basis beginning with the year ended December 31, 2025. For the year ended December 31, 2025, the tax provision expense was not material. For the year ended December 31, 2024, the Company recorded income tax benefit of $0.5 million.

A reconciliation of the Company’s effective tax rate to the statutory U.S. federal rate is as follows:

Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The types of temporary differences that give rise to significant portions of the Company’s deferred income tax assets and liabilities are set out below (in thousands):

The Company has established a valuation allowance for the amount of deferred tax assets that are not more likely than not to be realized. Management considered all available evidence, both positive and negative, including but not limited to the Company’s historical operating results, income or loss in recent periods, cumulative losses in recent years, forecasted earnings, future taxable income, and significant risk and uncertainty related to forecasts, and concluded the deferred tax assets are not more likely than not to be realized. The net change in the total valuation allowance for the years ended December 31, 2025 and 2024 was an increase of $11.0 million and $20.9 million, respectively.

As of December 31, 2025, the Company had $45.8 million of federal net operating loss carryforwards and $77.9 million of state net operating loss carryforwards, available to reduce future taxable income. The federal net operating loss carryforwards will carryforward indefinitely. The state net operating loss carryforwards will begin to expire in 2041, if not utilized.

As of December 31, 2025, the Company had federal research and development tax credits carryforward of $5.2 million and state research and development tax credits carryforward of $3.7 million, available to reduce future income taxes. The federal research and development tax credits will begin to expire in 2040 if not utilized. The state research and development tax credits have no expiration date.

Internal Revenue Code section 382 (“IRC Section 382”) places a limitation (the “Section 382 Limitation”) on the amount of taxable income that can be offset by net operating loss (“NOL”) carryforwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. California has similar rules. When an ownership change occurs, IRC Section 382 limits the use of NOLs and credits in subsequent periods based on the annual 382 limitations. The annual 382 limitations may limit the full use of available tax attributes in one year but the identified ownership changes may not result in expiration of tax attributes for use prior to expiration of their respective carryforward periods. The Company performed a Section 382 analysis through the year ended December 31, 2024 and determined there were ownership changes in 2021 and 2023. The ownership changes did not result in a reduction of its net operating loss or in its research and development credit carryforwards expiring unused.

A reconciliation of the beginning and ending unrecognized tax benefit amount is as follows (in thousands):

The reversal of the uncertain tax benefits would not impact the Company’s effective tax rate as the Company continues to maintain a full valuation allowance against its deferred tax assets.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. During the years ended December 31, 2025 and 2024, the Company didnot recognize accrued interest and penalties related to unrecognized tax benefits.

The Company files income taxes in the U.S. federal jurisdiction, the state of California and various other U.S. states. The Company is not currently under examination by income tax authorities in federal, state or other jurisdictions. All income tax returns will remain open for examination by the federal, state and foreign authorities for three or four years, from the date of utilization of any NOLs or credits.

12. Related Parties

Third Rock Ventures

During the year ended December 31, 2024, the Company issued a total of 12.4 million shares of its Series B Convertible Preferred Stock to Third Rock Ventures VI, L.P., a holder of more than 5% of the Company’s outstanding capital stock, during the second tranche closing in May 2024, for cash proceeds of $15.3 million. These shares were converted to shares of the Company's common stock upon the consummation of its IPO in October 2024. No shares were issued during the year ended December 31, 2025.

In August 2021, the Company entered into a service agreement with Third Rock Ventures, LLC (“TRV”), a holder of more than 5% of the Company’s outstanding capital stock, (the “TRV service agreement”) under which TRV provides consulting services to the Company. For the year ended December 31, 2024, the Company recorded expense of $0.3 million for such services as general and administrative expenses in the Company’s statements of operations and comprehensive loss. As of December 31, 2024, $0.1 million of expense related to TRV was recorded in accrued expenses and other current liabilities. There wasno expense recorded in accrued expenses and other current liabilities andno outstanding accounts payable to TRV at December 31, 2025.

The Company's former interim Chief Medical Officer, and also a current member of the Company's board of directors, was designated to the Company's board of directors by TRV and is affiliated with TRV. He did not receive any cash compensation from the Company for his service as its interim Chief Medical Officer as his services were provided to the Company through the TRV service agreement.

Of the total fees the Company incurred under the TRV service agreement for the year ended December 31, 2024, $0.2 million was attributed to consulting services provided by the board member. Additionally, as compensation for his services as the Company's interim Chief Medical Officer, the Company granted him options to purchase 23,227 shares during the year ended December 31, 2024 at the exercise price of $2.76 per share. The board member ceased serving as interim Chief Medical Officer in September 2024.

In December 2024, the Company entered into a separate consulting agreement with the board member, under which he may provide up to $9,500 of consulting services per month, which are also provided to the Company through the TRV service agreement. For the year ended December 31, 2025, the Company recorded expense of $0.1 million for such consulting services. As of December 31, 2025, there was a minimal expense recorded in accrued expenses and other current liabilities and a minimal outstanding accounts payable to the board member.

RA Capital

During the year ended December 31, 2024, the Company issued a total of 12.2 million shares of its Series B Convertible Preferred Stock to entities affiliated with RA Capital Management, L.P. (collectively, “RA Capital”), which held more than 5% of the Company’s outstanding capital stock, during the second tranche closing in May 2024, for total cash proceeds of $15.0 million. These shares were convertedto shares of the Company's common stock upon the consummation of its IPO in October 2024. No shares were issued during the year ended December 31, 2025.

Samsara BioCapital

During the year ended December 31, 2024, the Company issued a total of 4.3 million shares of its Series B Convertible Preferred Stock to Samsara BioCapital, L.P. (“Samsara BioCapital”), a holder of more than 5% of the Company’s outstanding capital stock, during the second tranche closing in May 2024, for cash proceeds of $5.2 million. These shares were converted to shares of the Company's common stock upon the consummation of its IPO in October 2024. No shares were issued during the year ended December 31, 2025.

13. Net Loss Per Share

The Company had 4,554,420 shares of potentially dilutive securities, comprised of 4,378,484 outstanding stock options,131,224 unvested restricted stock awards subject to repurchase, and 44,712 shares issuable under the ESPP, not included in the calculation of diluted net loss per share for the year ended December 31, 2025 because to do so would be anti-dilutive.

14. Employee Retirement Benefit Plan

The Company maintains a 401(k) retirement savings plan (the “401(k) Plan”) for its employees. The 401(k) Plan allows eligible employees to make contributions up to the maximum allowable by the Internal Revenue Service (“IRS”). For the years ended December 31, 2025 and 2024, the Company made matching contributions of and recorded contribution expenses of $0.5 million and $0.2 million, respectively.

15. Segment Information

The CODM assesses performance for the Company’s operating segment and decides how to allocate resources based on the Company’s available cash resources. Total operating expenses and net loss of the Company’s operating segment are used to monitor budget versus actual results. The measure of segment assets is reported as total assets on the Company’s balance sheet.

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

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

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

16. Subsequent Events

On January 8, 2026, the Company appointed Mark A. Wilson as Chief Legal Officer.