Septerna, Inc.

Notes to UNAUDITED Condensed Financial Statements

Note 1. Organization and Basis of Presentation

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.

Basis of Presentation

The accompanying unaudited interim condensed financial statements have been prepared in conformity with generally accepted accounting principles 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 interim financial information.

The condensed balance sheet data at December 31, 2025 was derived from the audited financial statements included in Septerna’s Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the Securities and Exchange Commission (“SEC”) on March 9, 2026. These interim unaudited condensed financial statements should be read in conjunction with the audited financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Liquidity and Capital Resources

The accompanying unaudited condensed financial statements have been prepared assuming the Company will continue as a going concern, which assumes that the Company will realize its assets and satisfy its liabilities in the normal course of business.

As of March 31, 2026, the Company had cash, cash equivalents and marketable securities of $522.1 million, which the Company believes will be sufficient to fund its planned operations for a period of, at least, twelve months following the date of filing of this report.

Significant Accounting Policies

During the three months ended March 31, 2026, there were no changes to the Company’s significant accounting policies as described in Note 2 of the audited financial statements for the year ended December 31, 2025.

Recently Adopted Accounting Pronouncements

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 determined there isno impact ofadopting ASU 2025-05 as it does not develop forecasts as part of estimating expected credit losses.

Accounting Pronouncements Not Yet Adopted

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

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, an accounting standard update that 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.

Note 2. Balance Sheet Components

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, 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 condensed balance sheets.

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 $0.4 million for each of thethree month periods ended March 31, 2026 and 2025.

Accrued Expenses and Other Current Liabilities

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

Note 3. Revenue

Novo Collaboration Agreement

On May 13, 2025, the Company and Novo entered into a global Collaboration and License Agreement (the “Novo Collaboration Agreement”). Under the Novo Collaboration Agreement, the Company is exclusively collaborating with Novo 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. The collaboration objective is to discover and develop several novel mono-, dual-, or triple-acting oral small molecule drug candidates directed across five GPCRs, including the GLP-1, GIP, and glucagon receptors (the “Collaboration Targets”). The collaboration included the Company's most advanced preclinical metabolic program focused on developing an oral small molecule agonist to the GIP receptor.

After the Novo Collaboration Agreement became effective on July 1, 2025, the Company and Novo commenced four simultaneous research and development programs (each an “R&D Program”) with each pursuing one or more Collaboration Targets from discovery through development candidate selection. Beginning with investigational new drug-enabling activities, Novo will then be responsible for all further global development and commercialization for each product candidate at its sole cost and expense. Subject to certain limitations, Novo has the right to modify the research plans and explore additional combinations of the existing Collaboration Targets for one or more of such R&D Programs provided that no more than four R&D Programs will be pursued simultaneously. Novo reimburses 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. Novo is also responsible for all commercialization costs subject to the Company's profit and loss share option described below for up to one program under the collaboration.

Under 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 its other research and development programs.

In July 2025, Novo paid the Company a one-time, non-refundable upfront payment of $195.0 million. For each R&D Program, the Company is also eligible to receive up to approximately $498.0 million in research, development, regulatory, and commercial milestone payments. 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. The royalty payments are subject to certain step-down provisions including reductions due to valid patent claim expiration, generic product market share on a country-by-country basis, payments made under certain licenses for third party intellectual property and application of Inflation Reduction Act maximum fair price provisions (with such cumulative reductions in most cases subject to a royalty reduction floor). Subject to certain terms, conditions and limitations, the Company holds an option to elect a profit and loss sharing arrangement (in lieu of milestones and royalties) for one product candidate under the Novo Collaboration Agreement, which must be exercised by the Company within a specified time period following completion of either IND-enabling studies or the first Phase 1 clinical trial for such product (the "Profit Share Option").

The Company periodically assesses the probability of receiving payments from achieving the research and development, collaboration target, and regulatory milestones, and includes the milestone amounts in the transaction price when they are considered probable. As of March 31, 2026, the Company determined thattwo discovery research milestones became probable of achievement. As a result, $2.0 million of milestone consideration was included in the transaction price and allocated to the performance obligations to which they relate. Revenue associated with these milestones is recognized over time using an input method, as discussed further below. Although the Company's contractual right to payment associated with these two collaboration milestones has not yet arisen under the Novo Agreement, recognition of milestones consideration within the allocated transaction price, and recognition of revenue during the three months ended March 31, 2026 March 31, 2026 is appropriate in accordance with ASC 606.

No royalty revenue has been recognized and the Profit Share Option was deemed improbable with no amount recognized for repayment of certain reimbursements to Novo as of March 31, 2026.

Royalties and commercial sale milestones are recognized when the subsequent sales occur based on the sales or usage-based royalty exception. The Company also periodically reassesses the probability of exercising the Profit Share Option.

The Company recognizes revenue related to the combined license and research services performance obligations 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.

The following table presents revenue recognized, transaction price including the portion associated with the milestones that are probable, and estimated revenue expected to be recognized in the future as of March 31, 2026 (in thousands):

(1)

As of March 31, 2026, the Company determined that two discovery research milestones became probable of achievement. Accordingly, the Company recognized these milestones within the transaction price. The milestones recognized within the transaction price are allocated to the applicable R&D Program performance obligations to which they relate and are recognized as revenue using the input method.

(2)

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. In addition, $94.0 million of variable consideration related to estimated research and manufacturing services for the four R&D Programs, and $2.0 million of variable consideration related to thetwo milestones deemed probable of achievement was allocated to the transaction price as of March 31, 2026.

(3)

For thethree months ended March 31, 2026, the Company recognized revenue of $26.5 million, which was comprised of $10.3 million variable consideration related to research services for the four R&D Programs and manufacturing services, $15.7 million recognition of deferred revenue for the one-time, non-refundable upfront payment, and $0.5 million milestone revenue recognized on the two milestones discussed above. The Company recognized $26.8 million of the one-time, non-refundable upfront payment and $18.6 million variable considerations related to research services for the four R&D Programs and manufacturing services during the year ended December 31, 2025.

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 condensed 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 condensed balance sheets.

The following table summarizes the changes in deferred revenue (in thousands):

(1)

During the three months ended March 31, 2026, the Company recognized $0.5 million of milestone revenue as described above and recorded a related contract asset as the contractual right to payment associated with the discovery research milestones under the Novo Collaboration Agreement had not arisen. In accordance with ASC 606, contract assets and liabilities associated within an agreement are considered interdependent and are recorded net in the condensed balance sheets. Accordingly, the contract asset was netted against the deferred revenue balance as of March 31, 2026.

(2)

Comprised of $59.8 million of deferred revenue, current and $92.2 million of deferred revenue, non-current, which is expected to be recognized over approximately 3.3 years. As of March 31, 2026, all of the Company's performance obligations associated with its deferred revenue balances are outstanding.

As of March 31, 2026 and December 31, 2025, the Company’s accounts receivable was entirely attributed to Novo, andno allowance for credit loss was recorded related to accounts receivable.

Note 4. 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.

Fair value is determined based on a three-tier hierarchy under the authoritative guidance for fair value measurements and disclosures that prioritizes the inputs used in measuring fair value as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurements and unobservable (i.e., supported by little or no market activity).

Money market funds are highly liquid investments and are classified as Level 1. The pricing information for these assets is readily available and can be independently validated as of the measurement date. Marketable securities, including U.S. Treasury securities, U.S. government agency securities, commercial paper, and corporate debt securities, are classified as Level 2. These securities are valued using fair value from third-party pricing services, which may use observable inputs based on real-time trade data for similar assets, broker/dealer quotes, bids and/or offers and other observable inputs.

The carrying amounts of the Company’s prepaid and other current assets, accounts payable, and accrued and other current liabilities approximate fair value due to their short maturities.

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 March 31, 2026 and 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 March 31, 2026 or 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 March 31, 2026 and 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 March 31, 2026 or December 31, 2025.

Interest receivable as of March 31, 2026 and December 31, 2025 was $3.4 million and is recorded as a component of prepaid expenses and other current assets on the Company’s condensed balance sheets.

As of March 31, 2026 and 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 March 31, 2026, the Company held 167 marketable securities in an unrealized loss position. As of December 31, 2025, the Company held 44 marketable securities in an unrealized loss position.

As of March 31, 2026, the following table summarizes the amortized cost and the unrealized gains (losses) of the marketable securities presented within marketable securities and cash equivalents (in thousands):

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 and cash equivalents (in thousands):

As of March 31, 2026, the following table summarizes marketable securities in an unrealized loss position (in thousands):

Note 5. 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 is not currently a party to any legal proceeding that, if determined adversely to the Company, in management’s opinion, is expected to individually or in the aggregate have a material adverse effect on its business, financial condition or liquidity and results of operations.

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.

The maximum 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 exposure and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. In addition, the Company is not currently aware of any indemnification claims that could have a material effect on its condensed financial statements. Accordingly, the Company didnot record any liabilities associated with these indemnification rights and agreements as of March 31, 2026 and December 31, 2025.

Note 6. Common Stock

As of March 31, 2026 and December 31, 2025, the Company was authorized to issue 500.0 million shares of common stock, par value $0.001 per share.

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

At-the-Market Equity Program

In March 2026, the Company entered into an ATM Equity Offering SM Sales Agreement (the “Sales Agreement”) with BofA Securities, Inc., acting as the Company’s sales agent and/or principal (the “Sales Agent”), with respect to an “at-the-market offering” program pursuant to which the Company may, from time to time, at its sole discretion, issue and sell shares of its common stock having an aggregate offering price of up to $150.0 million through the Sales Agent (the “ATM Program”). Pursuant to the Sales Agreement, any shares will be sold pursuant to the automatic shelf registration statement on Form S-3ASR (File No. 333-294185) filed with the SEC on March 10, 2026, which became automatically effective upon filing, including the base prospectus and the sales agreement prospectus contained therein. As of March 31, 2026, the Company hadnot sold any shares of its common stock under the ATM Program.

Note 7. Stock-Based Compensation

Stock Plans

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 immediately prior to the effective date of the Company's initial public offering (“IPO”) and superseded the Company’s 2021 Stock Option and Grant Plan, as amended (the “2021 Plan”) (together, the “Stock Plans”).

On January 1, 2026, the number of shares of common stock available under the 2024 Plan increased by 2.2 million shares pursuant to an evergreen provision of the 2024 Plan. As of March 31, 2026, there were 4.6 million shares available for issuance under the 2024 Plan.

Inducement Plan

In February 2026, the Company’s board of directors adopted the 2026 Inducement Plan (the “Inducement Plan”). The Inducement Plan initially reserved 0.5 million shares of common stockto be issued exclusively for grants of equity-based awards to individuals who were not previously employees or directors of the Company, as an inducement material to such individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Marketplace Rules of the Nasdaq Stock Market. The Inducement Plan was adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4).

As of March 31, 2026, there were 0.3 million shares available for issuance under the Inducement Plan.

2024 ESPP

In October 2024, the Company’s board of directors adopted the 2024 Employee Stock Purchase Plan (the “2024 ESPP”), which became effective immediately prior to the effective date of the Company's IPO.

On January 1, 2026, the number of shares of common stock available under the 2024 ESPP increased by 0.4 million shares pursuant to an evergreen provision of the 2024 ESPP. As of March 31, 2026, there were 0.6 million shares available for issuance under the 2024 ESPP. There wereno issuances of common stock under the 2024 ESPP during thethree months ended March 31, 2026. As of March 31, 2026, total unrecognized stock-based compensation expense related to ESPP was $1.4 million, which is expected to be recognized over a weighted average period of 1.0 years.

Restricted Stock Awards

The following summarizes restricted stock award activity:

The aggregate grant date fair value of shares vested during the three months ended March 31, 2026 was $0.1 million.

Stock Options

The following summarizes stock option activity under the Stock Plans and the Inducement Plan:

The aggregate fair value of stock options that vested during the three months ended March 31, 2026 was $4.8 million. The stock options granted in thethree months ended March 31, 2026 had a weighted-average grant-date fair value per share of $20.10 and a total grant-date fair value of $41.7 million. The total intrinsic value of stock options exercised during thethree months ended March 31, 2026 was $2.8 million.

Stock Option Valuation

The weighted-average assumptions used to value employee and non-employee stock option awards granted under the Stock Plans and the Inducement Plan using the Black Scholes option pricing model, were as follows:

Stock-based Compensation Expense

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

As of March 31, 2026, total unrecognized stock-based compensation expense related to unvested restricted stock awards and unvested stock options was $60.5 million, which is expected to be recognized over a weighted-average period of 3.0 years.

Note 8. Related Parties

Third Rock Ventures

In August 2021, the Company entered into a service agreement (the “TRV service agreement”) with Third Rock Ventures, LLC (“TRV”), a holder of more than 5% of the Company’s outstanding capital stock, under which TRV provides consulting services to the Company. For the three months ended March 31, 2026 and 2025, the Company incurred no fees under the TRV service agreement. There wereno expenses related to TRV in accrued expenses and other current liabilities on the Company’s condensed balance sheets at March 31, 2026, or December 31, 2025.

A member of the Company’s board of directors is affiliated with TRV (the “TRV Board Member”). In December 2024, the Company entered into a separate consulting agreement with the TRV Board Member, which includes cash compensation to be paid directly to the TRV Board member.

For the three months ended March 31, 2026 and 2025, the fees attributed to consulting services provided by the TRV Board Member were nominal.

During the three months ended March 31, 2026, no fees related to the TRV Board Member’s consulting services were recorded in accrued expenses and other current liabilities. As of December 31, 2025, there was a nominal expense recorded in accrued expenses and other current liabilities and a nominal outstanding accounts payable to the TRV Board Member.

Note 9. Net Loss Per Share

The Company had 6,483,046 shares of potentially dilutive securities, comprised of 6,295,470 outstanding stock options,75,247 unvested restricted stock awards subject to repurchase, and 112,329 shares issuable under the 2024 ESPP, not included in the calculation of diluted net loss per share for thethree months ended March 31, 2026 because to do so would be anti-dilutive.

Note 10. Segment Information

The Company operates inone segment, which is GPCR oral small molecule drug discovery. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The measure of segment profit or loss is net loss, which is also reported on the condensed statements of operations and comprehensive loss as net loss.

The measure of segment assets is reported on the condensed balance sheet as total assets. The CODM uses segment net loss to monitor spending, assess performance for the Company and management, evaluate the progress of completing corporate goals, decide how to allocate resources among the Company’s clinical and pre-clinical portfolios, and make strategic decisions about business development opportunities.

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, depreciation and amortization of property and equipment, net, and other operating expenses.

As of March 31, 2026 and December 31, 2025, all of the Company’s property and equipment was maintained in the U.S. For the three months ended March 31, 2026 and 2025, the Company’s revenue was generated from providing research services and was earned in the U.S.