Evommune, Inc.

1. Organization and Description of the Business

Business and Organization

Evommune, Inc. and its subsidiaries (“Evommune” or the “Company”) is a Delaware corporation headquartered in Palo Alto, California. Evommune is a clinical stage biotechnology company developing innovative therapies that target key drivers of chronic inflammatory diseases.

Liquidity

The Company has incurred significant operating losses since inception and has relied primarily on equity financing and license revenue to fund its operations. As of March 31, 2026, the Company had an accumulated deficit of$242.8 million. In February 2026, the Company raised net proceeds of $117.2 million from the issuance of 4,494,279 shares of common stock in a private placement at a price of $27.88 per share (“2026 Private Placement”). The Company expects to continue to incur substantial losses, and its ability to achieve and sustain profitability will depend on the successful development, approval, and commercialization of product candidates and on the achievement of sufficient revenue to support its cost structure. The Company may never achieve profitability and, unless and until it does, the Company will need to continue to raise additional capital. As of March 31, 2026, management expects that existing cash, cash equivalents and investments will be sufficient to fund the Company’s current operating plan for at least twelve months from the issuance date of these financial statements.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as defined by the Financial Accounting Standards Board (“FASB”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement have been included. Interim results are not necessarily indicative of results that may be expected for the fiscal year ending December 31, 2026 or other interim periods.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2025, and the notes thereto, included in the Annual Report on Form 10-K that was filed with the SEC on March 5, 2026 (“Form 10-K”). Since the date of such consolidated financial statements, there have been no significant changes to the Company’s significant accounting policies, other than as described below. The Condensed Consolidated Balance Sheet as of December 31, 2025 has been derived from the audited Consolidated Balance Sheet as of December 31, 2025 included in the Company's Form 10-K but does not include all of the information required by GAAP for complete financial statements.

Restricted Cash

Restricted cash is defined as cash and cash equivalents that cannot be withdrawn or used for general operating activities. As of both March 31, 2026 and December 31, 2025, the Company’s restricted cash was approximately$1.4 million, and was associated with a letter of credit issued in connection with the Company’s office leases.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03 “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures” (“ASU 2024-03”), which will require additional expense disclosures for all public entities. The amendments require that at each interim and annual reporting period, an entity will disclose certain disaggregated expenses included in each relevant expense caption, as well as the total amount of selling expenses and, in annual periods, an entity’s definition of selling expenses. ASU 2024-03 is effective for annual reporting periods beginning with the fiscal year ending December 31, 2027, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the incremental disclosures that will be required in its future consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11 “Interim Reporting: Narrow-Scope Improvements”, which enhances interim disclosure requirements by clarifying scope, providing a comprehensive list of required disclosures, and requiring disclosure of material events occurring since the most recent annual reporting period. The amendments are effective for interim reporting periods for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the incremental disclosures that will be required in its future consolidated financial statements.

3. Fair Value Measurements and Fair Value of Financial Instruments

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

Items classified as Level 1 within the valuation hierarchy consist of the Company’s cash equivalents held in money market funds. The Company measures these investments at fair value determined based on Level 1 observable quoted price market inputs. The Company’s money market funds are included in cash and cash equivalents in the unaudited Condensed Consolidated Balance Sheets.

4. Cash, Cash Equivalents, Short-term and Long-term Investments

As of March 31, 2026 and December 31, 2025, cash and cash equivalents consisted of cash and money market mutual funds. The following tables summarize the Company’s short-term and long-term investments (in thousands):

As of March 31, 2026, the Company had 52 securities with a fair value of$163.1 million with a contractual maturity of less than 12 months and 30 securities with a fair value of$95.5 million with a contractual maturity of greater than 12 months. As of December 31, 2025, the Company had 30 securities with a fair value of $105.1 million with a contractual maturity of less than 12 months and 14 securities with a fair value of $67.5 million with a contractual maturity of greater than 12 months.

5. Fixed Assets, Net

Fixed Assets consisted of the following (in thousands):

Depreciation and amortization expense of property and equipment, net totaled$0.1 million and$0.2 million for the three months ended March 31, 2026 and 2025, respectively. In March 2026, the Company disposed of fully depreciated assets and removed the cost and related accumulated depreciation of$0.3 million from the unaudited Condensed Consolidated Balance Sheets. No gain or loss on disposal was recorded.

6. Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

7. Strategic Collaborations and License Agreements

The Company has entered into several license agreements for products currently under development. The Company’s license agreements are disclosed in “Note 5. Strategic Collaborations and License Agreements” to the Company’s annual audited consolidated financial statements for the year ended December 31, 2025 included in the Form 10-K. Since the date of such consolidated financial statements, there have been no significant changes to the Company’s license agreements, other than the following.

Maruho Co., Ltd.

Maruho Japan Agreement

As of December 31, 2024, the Company had recorded short term deferred revenue of $3.0 million, attributable to the Company’s on-going performance obligations. The Company recognized $3.0 million in license revenue for the three months ended March 31, 2025 upon the satisfaction of the performance obligation. No other milestones were achieved or recorded as license revenue for thethree months ended March 31, 2026 and 2025.

AprilBio

In June 2024, the Company entered into a License, Development and Commercialization Agreement with AprilBio Co., Ltd. (“AprilBio”), upon which AprilBio granted the Company an exclusive worldwide license to develop and commercialize an IL-18BP compound (“EVO301”). For the three months ended March 31, 2026 and 2025, the Company has recorded $0.5 million and $1.5 million, respectively, as research and development expense upon achievement of a development milestone under the AprilBio License, Development and Commercialization Agreement. No other milestones were achieved or recorded as research and development expenses for thethree months ended March 31, 2026 and 2025.

8. Commitments and Contingencies

Leases

The Company’s commitments are disclosed in “Note 6. Commitments and Contingencies” to the Company’s annual audited consolidated financial statements for the year ended December 31, 2025 included in the Form 10-K. Since the date of the Form 10-K, there have been no material changes to the Company’s commitments or contingencies, including leases, other than as described below.

In July 2025, the Company executed asixty-three-month lease agreement to lease office space in Palo Alto, California. The lease commenced in March 2026 and includes annual lease payments during each of the first three years of approximately $1.5 million, with an increase of approximately 3% each year thereafter for the remainder of the lease. The Palo Alto lease includes an option to terminate after thirty-nine months, subject to a one-time termination fee equal to six months of base rent. The Palo Alto lease also includes a renewal option for one additional five-year period and does not have any residual value guarantees or any restrictions or covenants. The Company is not reasonably certain to exercise either the early-termination or renewal option, and therefore neither option is included in the measurement of the related right-of-use asset and lease liability upon commencement of the lease.

In connection with the buildout of the leased premises, the Company also entered into certain finance leases for leasehold improvements. As of the lease commencement date, these arrangements resulted in the recognition of approximately $0.6 million of finance lease right-of-use assets and corresponding lease liabilities.

As of March 31, 2026, future minimum lease payments included in the measurement of lease liabilities were as follows (in thousands):

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases and finance leases (in thousands):

For the three months ended March 31, 2026, cash payments were$0.2 million, and$0.1 million for operating leases and finance leases, respectively. For the three months ended March 31, 2025, cash payments were$0.2 million,$0.1 million, and$0.1 million for operating leases, finance leases and financing obligation, respectively. The Company's financing obligation was completed in the third quarter of 2025. Interest expense is recorded within other expense in the Company’s unaudited Condensed Consolidated Statements of Operations. The weighted average discount rate and remaining terms are as follows:

License Agreements

Except as disclosed in Note 7, no such other milestone events occurred during the three months ended March 31, 2026 and 2025.

Legal proceedings

The Company was not subject to any material legal proceedings during the three months ended March 31, 2026 and 2025, and, no material legal proceedings are currently pending or threatened.

9. Net Loss Per Share

Basic net loss per share of common stock is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, the convertible preferred stock, common stock subject to repurchase, stock options, restricted stock units (“RSUs”), and stock appreciation rights (“SARs”) are considered to be potentially dilutive securities. Basic and diluted net loss per share is presented in conformity with the two-class method required for participating securities as the convertible preferred stock is considered a participating security. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses. As such, the net loss is attributed entirely to common stockholders. Because the Company has reported a net loss for the reporting periods presented, the diluted net loss per share of common stock is the same as basic net loss per share of common stock for those periods.

The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share amounts):

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:

The amounts above represent common stock equivalents, where applicable.

10. Common Stock

As of March 31, 2026, the Company is authorized to issue 500,000,000 shares of $0.0001 par value common stock. Each share of common stock is entitled toone vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors.

In February 2026, the Company received net proceeds of $117.2 million from the issuance of 4,494,279 shares of common stock in a private placement at a price of $27.88 per share.

The Company has reserved common stock for future issuance as follows:

11. Stock Option Plan

Stock Options

A total of 7,272,358 shares of the Company’s common stock were reserved for future issuance under the 2025 Equity Incentive Plan (the “2025 Plan”) at December 31, 2025. On January 1, 2026, pursuant to the evergreen provision contained in the 2025 Plan, the number of shares reserved for future grants was increased by 1,576,204 shares, which was five percent (5%) of the outstanding shares of common stock on December 31, 2025. This reserve will increase each subsequent anniversary through January 1, 2035, by an amount equal to the smaller of (a)5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) a lesser amount determined by the Company’s board of directors.

The following table summarizes the Company’s stock option activity:

The weighted-average grant-date fair value of options granted during the three months ended March 31, 2026 and 2025 was$15.55 and$2.30 per option, respectively. The aggregate intrinsic value of options exercised for the three months ended March 31, 2026 and 2025 was less than $0.1 million, respectively. Intrinsic values are calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that had exercise prices that were lower than the fair value per share of the common stock, multiplied by the related in the money options that would have been received by the option holders had they exercised their options at the end of the period.

As of March 31, 2026, the total unrecognized stock-based compensation expense for stock options was$35.9 million, which is expected to be recognized over a weighted-average period of 3.4 years. The total fair value of options vested for the three months ended March 31, 2026 and 2025 was$0.6 million and$0.5 million, respectively.

The fair value of the stock options granted was estimated using the following assumptions:

Restricted Stock Units

In December 2024, certain employees were granted a total of 437,754 RSUs. The terms of the RSUs are disclosed in the annual audited consolidated financial statements for the year ended December 31, 2025 included in the Company's Form 10-K. There wereno RSUs granted or vested during thethree months ended March 31, 2026. As of March 31, 2026, the total unrecognized stock-based compensation expense for unvested restricted stock was$0.9 million, which is expected to be recognized over a weighted-average period of 2.7 years. The Company recorded$0.1 million as stock-based compensation expenses for RSUs for the three months ended March 31, 2026. No stock compensation expense was recognized for the three months ended March 31, 2025.

Stock Appreciation Rights

In December 2024, an executive officer was granted 444,992 SARs with a base price of $2.99 per unit. The terms of the SAR are disclosed in theannual audited consolidated financial statements for the year ended December 31, 2025 included in the Company’s Form 10-K. There wereno SARs granted or vested during thethree months ended March 31, 2026. The Company recorded stock-based compensation expense of$0.5 million for SAR units for the three months ended March 31, 2026. No stock compensation expense was recognized for thethree months ended March 31, 2025.

Stock-Based Compensation Expense

Stock compensation expense recorded for the three months ended March 31, 2026 and 2025, consisted of expense for stock options, RSUs and SARs. The following table is a summary of stock compensation expense by function recognized for the periods indicated (in thousands):

12. Segments

The Company operates inone segment considering the nature of the Company’s products and services, class of customers, methods used to distribute the products and the regulatory environment in which the Company operates. The following is a breakdown of net loss by category for thethree months ended March 31, 2026 and 2025 as managed by the chief operating decision maker (in thousands).

Other research and development consists of discovery research, pre-clinical programs and other early-stage development programs. The measure of segment assets, all of which are held in the United States, is reported on the condensed consolidated balance sheets as total assets. Additionally, segment depreciation expense is consistent with amounts reported within the unaudited Condensed Consolidated Statements of Cash Flows.

13. Income Taxes

The Company’s interim income tax provision consists of U.S. federal and state income taxes based on the estimated annual effective tax rate that the Company expects for the full year together with the tax effect of discrete items. Each quarter the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as necessary. As of March 31, 2026, and December 31, 2025, the Company was in a pre-tax loss position and is anticipated to remain so throughout the year. For the three months ended March 31, 2026 and 2025, the Company didnot record any tax benefit or expense.

In assessing the realizability of deferred tax assets, management evaluates whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible and/or net operating losses can be utilized. Management assesses all positive and negative evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized. This evidence includes, but is not limited to, prior earnings history, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Significant weight is given to positive and negative evidence that is objectively verifiable. Based on these factors, including cumulative losses in recent years, the Company continues to maintain a full valuation allowance against its net deferred tax assets as of March 31, 2026 and December 31, 2025.