Tectonic Therapeutic, Inc.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

Our lead product candidates are TX45, an Fc-relaxin fusion molecule that activates the RXFP1 receptor, the GPCR target of the hormone relaxin, and TX2100, a VHH-Fc fusion antagonist antibody that binds to APJ, the receptor for apelin (“APLNR”).

Previous wording

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

Current wording

The ongoing APEX Phase 2 clinical trial is a global, 24-week, placebo-controlled trial designed to evaluate the safety and efficacy of TX45 administered subcutaneously (“SC”) in subjects with Pulmonary Hypertension (“PH”) in Heart Failure with Preserved Ejection Fraction (“HFpEF”), known as PH-HFpEF, enriched for combined pre- and post-capillary pulmonary hypertension (“CpcPH”). We dosed our first subject in the APEX Phase 2 clinical trial in October 2024. Subjects are being randomized to 300 mg SC (2 ml injection) once monthly of TX45, 300 mg SC once every other week of TX45, or placebo. Change from baseline in PVR in the PVR>3 population is the primary endpoint of the trial. The trial is designed to enrich for patients with a PVR>3 aiming for 70% of patients enrolled. In January 2026, the Independent Data Monitoring Committee (“IDMC”) met to review unblinded data from the TX45 APEX Phase 2 clinical trial. The data included safety data (adverse experiences, vital signs, plasma volume and labs) as well as efficacy data (right heart catheterization and six-minute walk distance). Based on this review the IDMC concluded that the trial could continue without any modifications. We expect topline results from the APEX clinical trial late in the fourth quarter of 2026 or early in the first quarter 2027.

Previous wording

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

Current wording

In March 2026, the first patient was screened in the 16-week, open label, repeat dose, Phase 2 clinical trial to evaluate TX45’s safety and hemodynamic effects in up to 25 subjects with PH associated with Interstitial Lung Disease (“ILD”), known as PH-ILD (Group 3 PH). PH-ILD is an orphan disease with limited treatment options and a high mortality rate. We believe TX45’s mechanism is well suited to PH-ILD’s disease pathophysiology because of its pulmonary vasodilation, anti-inflammatory, beneficial remodeling and anti-fibrotic activity. In patients with PH-ILD, elevation in PVR and mean pulmonary arterial pressure (“mPAP”) has been associated with increased mortality. In the Phase 1b trial in both CpcPH-HFpEF and CpcPH-HFrEF, TX45 resulted in significant reductions in mPAP and PVR as well as improvements in other hemodynamic endpoints. The TX45 PH-ILD Phase 2 trial will initiate at a dose of TX45 300 mg every four weeks administered SC with a primary efficacy endpoint of change from baseline in PVR at Week 16.

Previous wording

Research and development expenses consist of costs incurred for our research activities, including our discovery efforts and the development of our programs and platform. These expenses include:

Current wording

Research and development expenses consist of costs incurred in connection with our research activities, including discovery efforts and the preclinical and clinical development of our programs, product candidates, and platform. These expenses include:

Previous wording

employee-related expenses, including salaries and bonuses, related benefits and stock-based compensation expense, for employees engaged in research and development functions;

Current wording

employee-related expenses, including salaries, bonuses, benefits and stock-based compensation, for employees engaged in research and development functions;

Previous wording

costs related to manufacturing material for our preclinical studies and clinical trials, including fees paid to contract development and manufacturing organizations (“CDMOs”);

Current wording

costs related to manufacturing materials for our preclinical studies and clinical trials, including fees paid to contract development and manufacturing organizations (“CDMOs”);

Previous wording

facilities, depreciation and other expenses related to research and development activities, which include direct or allocated expenses for rent and maintenance of facilities, and utilities;

Current wording

facilities, depreciation, and other expenses related to research and development activities, which include direct or allocated expenses for rent, utilities, and facility maintenance;

Previous wording

We expense all research and development costs in the periods in which they are incurred. Costs for certain development activities are recognized based on our evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and third-party service providers. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense when the goods have been delivered or the services have been performed, or when it is no longer expected that the goods will be delivered or the services rendered. Upfront payments under license agreements are expensed upon receipt of the license, and annual maintenance fees under license agreements are expensed in the period in which they are incurred. Milestone payments under license or collaboration agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.

Current wording

We expense all research and development costs as incurred. Costs for certain development activities are recognized based on our evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and third-party service providers. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense when the goods have been delivered or the services have been performed, or when it is no longer expected that the goods will be delivered or the services rendered.

Previous wording

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our product candidates due to the inherently unpredictable nature of preclinical and clinical development. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory developments and our ongoing assessments as to each product candidate’s commercial potential. We will need to raise substantial additional capital in the future. Our clinical development costs are expected to increase significantly as we commence clinical trials. Our future expenses may vary significantly each period based on factors such as:

Current wording

Research and development activities are central to our business. Later-stage clinical programs generally incur higher costs than early-stage programs due to the increased size and duration of trials. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our product candidates due to the inherently unpredictable nature of preclinical and clinical development. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. We will continue to evaluate which product candidates to pursue and the allocation of funding based on preclinical and clinical results, regulatory developments, and commercial potential. We expect our research and development expenses to increase significantly as we advance our product candidates through clinical development and initiate additional clinical trials. Our future expenses may vary significantly each period based on factors such as:

Previous wording

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

Current wording

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

Previous wording

General and administrative expenses consist primarily of employee-related costs, including salaries and bonuses, related benefits and stock-based compensation expense, for our personnel in executive, legal, accounting, human resources, information technology, and other administrative functions. General and administrative expenses also include legal fees relating to patents and corporate matters, professional fees paid for accounting, auditing, consulting and tax services, insurance, travel expenses, office and information technology costs, and facilities and utilities comprised of depreciation and other expenses.

Current wording

General and administrative expenses consist primarily of employee-related costs, including salaries, bonuses, benefits and stock-based compensation, for our personnel in executive, finance and information technology, and other administrative functions. General and administrative expenses also include professional fees for legal, accounting, and consulting services, insurance costs, facilities and information technology expenses, investor relations and public company compliance costs, and other general corporate overhead. As a clinical-stage company, our general and administrative expenses are driven in part by the costs required to support our research and development activities and to operate as a public company.

Previous wording

Interest income primarily consists of interest earned on money market funds, which are included in cash and cash equivalents in the condensed consolidated balance sheets.

Current wording

Interest income primarily consists of interest earned on money market funds, which are included in cash and cash equivalents on the condensed consolidated balance sheets.

Previous wording

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

Current wording

The following tables summarize our results of operations for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):

Previous wording

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

Current wording

We anticipate that our general and administrative expenses will continue to increase in the future as we continue to invest in infrastructure and personnel to support the advancement of our clinical programs and operation as a public company. We also expect to incur additional intellectual property-related expenses as we file patent applications to protect innovations arising from our research and development activities.

Previous wording

Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical and clinical development of our research programs and product candidates. We expect that our research and development and general and administrative costs will increase in connection with conducting additional preclinical studies and clinical trials for our current and future research programs and product candidates, contracting with CDMOs to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources.

Current wording

Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical and clinical development of our research programs and product candidates. We expect that our research and development and general and administrative costs will increase in connection with conducting additional preclinical studies and clinical trials for our current and future research programs and product candidates, contracting with CROs and CDMOs to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources.

Previous wording

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

Current wording

As of March 31, 2026, we had $236.9 million in cash and cash equivalents and an accumulated deficit of $248.0 million. Based on our current business plans, management believes that our cash, cash equivalents and marketable securities on hand at March 31, 2026 are sufficient to meet our operating requirements for at least the next 12 months from the issuance of the consolidated financial statements included in this Quarterly Report. However, our estimates are based on assumptions that may prove to be incorrect, and we could exhaust our capital resources sooner than expected. We may require additional funding to support our research programs, clinical development, and general operations. There can be no assurance that additional financing, whether through public or private equity, debt, collaborations, or licensing arrangements, will be available on acceptable terms, or at all.

Previous wording

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

Current wording

The following table shows a summary of our cash flows for the three months ended March 31, 2026 and 2025:

Previous wording

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

Current wording

Net cash used in operating activities was $18.4 million for the three months ended March 31, 2026. Cash used in operations was primarily used to fund development of our product candidates, resulting in a net loss of $25.2 million, partially offset by non-cash charges of $4.0 million. Changes in operating assets and liabilities, including the timing of vendor payments and lease repayments, had an effect of $2.8 million on cash used in operating activities.

Previous wording

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

Current wording

Net cash used in operating activities was $13.1 million for the three months ended March 31, 2025. Cash used in operating activities was primarily used to fund our operations to develop our product candidates, resulting in a net loss of $15.9 million partially offset by non-cash charges of $3.0 million.

Previous wording

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

Current wording

Net cash used in investing activities during the three months ended March 31, 2026 and 2025 was nominal and related to the purchase and sale of property and equipment.

Previous wording

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

Current wording

Net cash provided by financing activities was $178.1 million for the three months ended March 31, 2025, primarily due to net proceeds of $177.3 million from the sale of shares in a private offering and $1.0 million in proceeds from the exercise of stock options.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of product candidates that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives.

Previous wording

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

Current wording

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

Previous wording

We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, other than our lease obligations.

Current wording

We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years.

Previous wording

We have entered into license agreements under which we are obligated to make specified milestone and royalty payments. The payment obligations under these agreements are contingent upon future events, such as our achievement of specified development, regulatory, and sales milestones, or generating product sales. Generally, the timing or likelihood of achieving these milestones or generating future product sales are not determinable. For further details regarding our significant contracts, and the commitments and contractual obligations contained within each contract, please refer to Note 10, Commitments and Contingencies, and to our consolidated financial statements included in this Quarterly Report, which is incorporated herein by reference.

Current wording

We have entered into license agreements under which we are obligated to make specified milestone and royalty payments. The payment obligations under these agreements are contingent upon future events, such as our achievement of specified development, regulatory, and sales milestones, or generating product sales. Generally, the timing or likelihood of achieving these milestones or generating future product sales are not determinable. For further details regarding our significant contracts, and the commitments and contractual obligations contained within each contract, please refer to Note 9, License Agreements, and Note 10, Commitments and Contingencies, and to our condensed consolidated financial statements included in this Quarterly Report, which is incorporated herein by reference.

Previous wording

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

Current wording

We have lease obligations for certain laboratory equipment and office and laboratory space under non-cancelable operating and finance leases. The leases expire at various times through 2029. Minimum lease payments under these agreements are $1.7 million in 2026, $1.9 million in 2027, $2.0 million in 2028, and $0.2 million in 2029. These amounts reflect enforceable obligations under non-cancelable contracts and do not include commitments that can be terminated without significant penalty.