LB PHARMACEUTICALS INC

Previous wording

The following discussion should be read in conjunction with our unaudited condensed financial statements and the accompanying notes of this Quarterly Report on Form 10-Q and our audited financial statements and the accompanying notes included in our final prospectus for our initial public offering dated September 10, 2025, and filed with the Securities and Exchange Commission, or SEC, pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, or the Securities Act, on September 12, 2025, or the Prospectus. This discussion and other parts of this Quarterly Report contain forward-looking statements based upon current beliefs, plans, and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements of our plans, objectives, expectations, intentions, forecasts and projections. Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of several factors including, but not limited to, those set forth under the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and you should carefully read the section titled “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled “Special Note Regarding Forward-Looking Statements.” You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Current wording

The following discussion should be read in conjunction with our unaudited condensed financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and the accompanying notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission, or SEC, on March 26, 2026, or the Annual Report. This discussion and other parts of this Quarterly Report contain forward-looking statements based upon current beliefs, plans, and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements of our plans, objectives, expectations, intentions, forecasts and projections. Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of several factors including, but not limited to, those set forth under the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and you should carefully read the section titled “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled “Special Note Regarding Forward-Looking Statements.” You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Previous wording

We are a clinical-stage biopharmaceutical company developing novel therapies for the treatment of schizophrenia, bipolar depression, and other neuropsychiatric diseases. We are building a pipeline that leverages the broad therapeutic potential of our lead product candidate, LB-102, a Phase 3-ready oral, small molecule, which we believe has the potential to be the first benzamide antipsychotic drug approved for neuropsychiatric disorders in the United States. LB-102 is a new chemical entity and a methylated derivative of amisulpride, a second-generation antipsychotic drug approved in over 50 countries, not including the United States, because the development and regulatory requirements of the U.S. Food and Drug Administration, or FDA, for amisulpride were incompatible with patent coverage on the drug. We developed LB-102 in order to address the limitations of amisulpride with a differentiated therapeutic profile and strong intellectual property protection. We believe LB-102’s mechanism of action, data from our recently completed Phase 2 trial of LB-102 in acute schizophrenia, and the legacy of clinical experience with amisulpride support the continued development of LB-102 in schizophrenia and bipolar depression. If successful in treating bipolar depression, we may also develop LB-102 in the treatment of major depressive disorder, or MDD. In the future, we may also develop LB-102 for the treatment of other neuropsychiatric disorders, including schizophrenia with predominantly negative symptoms, Alzheimer’s disease-related agitation and psychosis, manic episodes associated with bipolar disorder, and cognitive impairment associated with schizophrenia, or CIAS. We believe that LB-102, if approved, can become a mainstay of psychiatric practice by offering a potentially attractive alternative to branded and generic therapeutics for the treatment of schizophrenia, bipolar depression, and other neuropsychiatric diseases.

Current wording

We are a late-stage biopharmaceutical company developing novel therapies for the treatment of a wide range of neuropsychiatric disorders including schizophrenia, bipolar depression, adjunctive treatment of major depressive disorder and other diseases. We are building a pipeline that leverages the broad therapeutic potential of our lead product candidate, LB-102, which we believe has the opportunity to be the first benzamide antipsychotic drug approved for neuropsychiatric disorders in the United States. LB-102 is currently in late-stage clinical development for schizophrenia (pivotal Phase 3 NOVA-2 trial) and bipolar depression (Phase 2 ILLUMINATE-1 trial). Concurrently with the Phase 3 NOVA-2 trial, we are running an outpatient, open label trial (NOVA-3) to accrue the requisite safety population required to support NDA submission as well as other clinical trials and non-clinical studies typically required by FDA at the time of approval. We are also planning to conduct a Phase 2 clinical trial evaluating LB-102 as an adjunctive treatment in major depressive disorder, or MDD. LB-102 is a new chemical entity and a methylated derivative of amisulpride, a second-generation antipsychotic drug approved in over 50 countries, not including the United States, because the development and regulatory requirements of the U.S. Food and Drug Administration, or FDA, for amisulpride were incompatible with patent coverage on the drug. Amisulpride is a generic drug that has been extensively used in clinical practice following its initial approval in France in the 1980s, generating at least two million monthly prescriptions in 2023 in a subset of 16 continental European countries. Among these European prescriptions for amisulpride, our data suggest that approximately 60% are for schizophrenia and schizoaffective disorders and approximately 20% are for mood disorders and the remainder are for anxiety and a variety of other indications.

Previous wording

Since our inception in 2015, we have devoted substantially all of our resources to the research and development of LB-102 by conducting clinical trials and preclinical studies and recruiting management and technical staff to support these operations. Prior to our IPO, we funded our operations primarily through the aggregate gross proceeds of approximately $121.7 million from the sales of our redeemable convertible preferred stock, common stock, and convertible notes. In September 2025, we completed our IPO as detailed below.

Current wording

Since our inception in 2015, we have devoted substantially all of our resources to the research and development of LB-102 by conducting clinical trials and preclinical studies and recruiting management and technical staff to support these operations. To date, we have funded our operations primarily through the aggregate gross proceeds of approximately $549.5 million from the sales of our redeemable convertible preferred stock, common stock, convertible notes, the proceeds of our initial public offering, or IPO, and proceeds from our private placement. On September 12, 2025, we closed the IPO and issued 21,850,000 shares of common stock at a price to the public of $15.00 per share, including 2,850,000 shares issued upon the exercise in full of the underwriters’ over-allotment option to purchase additional shares. We received gross proceeds of $327.8 million. Net proceeds were $302.3 million, after deducting underwriting commissions and other offering costs totaling $25.4 million. In February 2026, we received gross proceeds of approximately $100.0 million from our private placement. Net proceeds were approximately $93.8 million, after deducting financial advisory and other financing.

Previous wording

We have not generated any revenue from product sales and we have incurred recurring losses since our inception. Our net losses were $13.7 million and $58.0 million for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $118.1 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future. We anticipate that our operating expenses and capital expenditures will increase substantially with our ongoing activities, particularly as we:

Current wording

We have not generated any revenue from product sales and we have incurred recurring losses since our inception. Our net losses were $19.1 million and $5.3 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had an accumulated deficit of $148.6 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future. We anticipate that our operating expenses and capital expenditures will increase substantially with our ongoing activities, particularly as we:

Previous wording

continue to progress the clinical development of LB-102 in acute schizophrenia, bipolar depression and other indications;

Current wording

continue to progress the clinical development of LB-102 in schizophrenia, bipolar depression, adjunctive MDD and other indications;

Previous wording

As a result, we will need substantial additional funding to support our operating activities as we advance our product candidates through clinical development, seek regulatory approval, and prepare for and, if any of our product candidates are approved, proceed to commercialization. Until such time, if ever, as we can generate substantial revenue from product sales to support our cost structure, we expect to finance our operating activities through a combination of public or private sales of equity, government or private party grants, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. Adequate funding may not be available to us on acceptable terms, or at all.

Current wording

We will not generate any revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing, and distribution. As a result, we will need substantial additional funding to support our operating activities as we advance our product candidates through clinical development, seek regulatory approval, and prepare for and, if any of our product candidates are approved, proceed to commercialization. Until such time, if ever, as we can generate substantial revenue from product sales to support our cost structure, we expect to finance our operating activities through a combination of public or private sales of equity, government or private party grants, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. Adequate funding may not be available to us on acceptable terms, or at all.

Previous wording

As of September 30, 2025, we had cash, cash equivalents and marketable securities of $314.5 million. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated operating and capital expenditure requirements into the second quarter of 2028. See “—Liquidity and Capital Resources.”

Current wording

As of March 31, 2026, we had cash, cash equivalents and marketable securities of $365.6 million. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated operating and capital expenditure requirements into the second quarter of 2029. See “—Liquidity and Capital Resources.”

Previous wording

In August 2023, contemporaneously with the closing of the Series C financing, we entered into several Amended and Restated Royalty Agreements with certain of our existing investors, co-founders, former and current directors, and former and current executive officers, including Zachary Prensky, Andrew Vaino, Ph.D., and Marc Panoff, none of whom were new investors of our Series C preferred stock. We received no consideration as part of the Amended and Restated Royalty Agreements. Pursuant to the Amended and Restated Royalty Agreements, we are obligated to pay royalties to all of the holders in an aggregate amount up to 2.75% of net sales arising from LB-102 worldwide through December 31, 2035. Thereafter, we are obligated to pay royalties to such holders in an aggregate amount up to 3.25% in perpetuity. Future sales are defined in these agreements as the gross payments received on total commercial sales of LB-102, whether by us or by any licensee of LB-102. As of September 30, 2025, certain of our former and current officers and their affiliates held 1.13% of the future royalties.

Current wording

In August 2023, contemporaneously with the closing of the Series C financing, we entered into several Amended and Restated Royalty Agreements with certain of our existing investors, co-founders, former and current directors, and former and current executive officers, including Zachary Prensky, Andrew Vaino, Ph.D., and Marc Panoff, none of whom were new investors of our Series C preferred stock. We received no consideration as part of the Amended and Restated Royalty Agreements. Pursuant to the Amended and Restated Royalty Agreements, we are obligated to pay royalties to all of the holders in an aggregate amount up to 2.75% of net sales arising from LB-102 worldwide through December 31, 2035. Thereafter, we are obligated to pay royalties to such holders in an aggregate amount up to 3.25% in perpetuity. Net sales are defined in these agreements as the gross payments received on total commercial sales of LB-102 less certain standard deductions, whether received by us or any licensee of LB-102. As of March 31, 2026, certain of our former and current officers and their affiliates held 1.13% of the future royalties.

Previous wording

Non-operating income (expense) consists primarily of interest income on our cash and cash equivalents and marketable securities, interest expense on borrowings under our convertible note agreements, and non-cash changes in the fair value of our outstanding preferred stock warrant liability and conversion feature derivative liability related to our convertible notes.

Current wording

Non-operating income consists primarily of interest income on our cash and cash equivalents and marketable securities, and non-cash changes in the fair value of our outstanding warrant liabilities.

Previous wording

The following table summarizes our research and development expenses for the periods presented (in thousands):

Current wording

The following table summarizes our research and development expenses for the three months ended March 31, 2026 and 2025 (in thousands):

Previous wording

Research and development expenses were $8.3 million for the nine months ended September 30, 2025, compared to $50.8 million for the nine months ended September 30, 2024. The decrease of $42.5 million was primarily due to: (i) a $43.5 million decrease in clinical trial expenses related to the conduct of our Phase 2 trial of LB-102 in the treatment of patients with acute schizophrenia, the majority of which took place in 2024; (ii) a $1.5 million decrease in preclinical research expenses related to the completion of preclinical studies in 2024, partially offset by (iii) a $1.1 million increase in consulting and other expenses primarily due to engagement of regulatory and industry experts to analyze Phase 2 clinical trial results and planning for future clinical trials; (iv) a $0.9 million increase in formulation and CMC expenses due to the scale-up and production of LB-102 to be used for clinical and preclinical development, and (v) a $0.4 million increase in personnel-related expenses primarily due to termination benefits related to the reduction in force, or RIF, in May 2025, as well as the hiring of the Senior Vice President of Technical Operations in February 2025.

Current wording

Research and development expenses were $14.6 million for the three months ended March 31, 2026, compared to $3.4 million for the three months ended March 31, 2025. The increase of $11.2 million was primarily due to: (i) a $4.6 million increase in clinical trial expenses related to our Phase 3 trial of LB-102 in the treatment of patients with acute schizophrenia; (ii) a $3.0 million increase related to the conduct of our Phase 2 trial of LB-102 in the treatment of patients with bipolar depression; (iii) a $1.7 million increase in expenses related to the formulation and production of LB-102 for use in our active and planned clinical trials; (iv) a $0.5 million increase in preclinical and other direct expenses primarily related to preclinical testing of LB-102; (v) a $0.9 million increase in personnel-related expenses primarily due to an increase in headcount; and (vi) a $0.6 million increase in other research and development expenses, primarily due to increased use of consultants.

Previous wording

As of September 30, 2025, we had $314.5 million of cash, cash equivalents and marketable securities. We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. Prior to our IPO, we funded our operations primarily by gross proceeds of $121.7 million from issuances of our redeemable convertible preferred stock, common stock and convertible notes. In September 2025, we completed our IPO pursuant to which we issued and sold an aggregate of 21,850,000 shares of common stock at a price to the public of $15.00 per share. We received aggregate net proceeds of $302.3 million after deducting underwriting discounts and commissions of $22.9 million and other offering expenses of $2.5 million. Until required for use in our business, we typically invest our cash, in accordance with our investment policy, in money market funds and fixed income securities including U.S. treasury bills and government securities. We attempt to minimize credit risk related to our cash and cash equivalents and marketable securities by maintaining a well-diversified portfolio that limits the amount of exposure as to maturity and investment type.

Current wording

As of March 31, 2026, we had $365.6 million of cash, cash equivalents and marketable securities. We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. Until required for use in our business, we typically invest our cash, in accordance with our investment policy, in money market funds and fixed income securities including U.S. treasury bills and government securities. We attempt to minimize credit risk related to our cash and cash equivalents and marketable securities by maintaining a well-diversified portfolio that limits the amount of exposure as to maturity and investment type.

Previous wording

The following table sets forth a summary of the net cash flow activity for the nine months ended September 30, 2025 and 2024 (in thousands):

Current wording

The following table sets forth a summary of the net cash flow activity for the three months ended March 31, 2026 and 2025 (in thousands):

Previous wording

Cash used in operating activities for the nine months ended September 30, 2025 was $17.1 million, consisting of net loss of $13.7 million adjusted for non-cash items, including a $1.9 million charge for stock-based compensation expense and $0.1 million in noncash lease expense partially offset by change in the fair value of the warrant liabilities of $1.6 million. Additionally, we had outflows of $3.2 million due to a change in our net operating assets and liabilities from the year ended

Current wording

Cash used in operating activities for the three months ended March 31, 2026 was $23.3 million, consisting of net loss of $19.1 million adjusted for non-cash items, including a $2.6 million charge for stock-based compensation expense offset by a gain on the change in the fair value of the warrant liabilities of $0.2 million. Additionally, we had outflows of $6.8 million due to a change in our net operating assets and liabilities for the three months ended March 31, 2026, including a $10.2 million increase in prepaid expenses and other current assets primarily related to deposits made to our CRO for start-up clinical trial expenses, partially offset by a $3.5 million increase in accounts payable and accrued expense primarily related to timing of payments and clinical trial expenses.

Previous wording

Cash used in operating activities for the nine months ended September 30, 2024 was $47.4 million, consisting of net loss of $58.0 million partially offset by non-cash items, including (i) the write off of deferred offering costs of $3.2 million, (ii) the change in fair value of the warrant liabilities of $0.8 million, (iii) stock-based compensation expense of $0.8 million, partially offset by realized gain on marketable securities of $0.6 million. Additionally, we had inflows of $6.2 million due to a change in our net operating assets and liabilities from the year ended December 31, 2023, including a $7.9 million increase in accounts payable and accrued expense primarily related to timing of payments and clinical trial expenses, partially offset by a $1.8 million increase in prepaid expenses primarily related to advance payments to our CRO for the Phase 2 acute schizophrenia trial.

Current wording

Cash used in operating activities for the three months ended March 31, 2025 was $8.1 million, consisting of net loss of $5.3 million partially offset by non-cash items, including (i) gain on the change in fair value of the warrant liabilities of $0.8 million and (ii) stock-based compensation expense of $0.6 million. Additionally, we had outflows of $2.8 million due to a change in our net operating assets and liabilities for the three months ended March 31, 2025, including a $2.9 million decrease in accounts payable and accrued expense primarily related to timing of payments and clinical trial expenses, and a $0.1 million decrease in prepaid expenses.

Previous wording

Cash used in investing activities for the nine months ended September 30, 2025 was $39.8 million primarily related to $44.8 million for the purchase of marketable securities to invest our excess cash, partially offset by $5.0 million in proceeds from sale and maturities of marketable securities.

Current wording

Cash provided by investing activities for the three months ended March 31, 2025 was $5.0 million primarily related to $2.5 million in proceeds from the sale of marketable securities and $2.5 million in maturities of marketable securities.

Previous wording

Cash provided by financing activities for the nine months ended September 30, 2025 was $303.7 million primarily related to the proceeds from the IPO, net of issuance costs.

Current wording

Cash provided by financing activities for the three months ended March 31, 2026 was approximately $93.8 million primarily related to the net proceeds from the private placement in February 2026.

Previous wording

We expect our expenses to increase substantially in connection with our ongoing activities, in particular as we continue to advance LB-102 and any of our future product candidates through clinical trials, as well as additional costs associated with operating as a public company.

Current wording

We expect our expenses to increase substantially in connection with our ongoing activities, as we continue to advance LB-102 and any of our future product candidates through clinical trials, scale the organization in preparation for a commercial launch of LB-102, if approved, as well as additional costs associated with operating as a public company.

Previous wording

As of September 30, 2025, we had cash, cash equivalents and marketable securities of $314.5 million. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities, will be sufficient to meet our anticipated operating and capital expenditure requirements into the second quarter of 2028.

Current wording

As of March 31, 2026, we had cash, cash equivalents and marketable securities of $365.6 million. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities, will be sufficient to meet our anticipated operating and capital expenditure requirements into the second quarter of 2029.

Previous wording

if approved, the costs of commercialization activities for LB-102 for the treatment of acute schizophrenia, bipolar depression or any other approved indication, or any other product candidate that receives regulatory approval to the extent such costs are not the responsibility of any future collaborators, including the costs and timing of establishing product sales, marketing, distribution, and manufacturing capabilities;

Current wording

if approved, the costs of commercialization activities for LB-102 for the treatment of acute schizophrenia, bipolar depression, adjunctive MDD or any other approved indication, or any other product candidate that receives regulatory approval to the extent such costs are not the responsibility of any future collaborators, including the costs and timing of establishing product sales, marketing, distribution, and manufacturing capabilities;

Previous wording

In May 2024, we entered into a new lease agreement for office space in New York, New York totaling approximately 8,900 square feet. The term of this lease commenced on June 21, 2024, which is the date we took control over the leased premises. The lease term continues through March 2032. See Note 7 Leases to our unaudited condensed financial statements for more information regarding such leases.

Current wording

In May 2024, we entered into a new lease agreement for office space in New York, New York totaling approximately 8,900 square feet. The term of this lease commenced on June 21, 2024, which is the date we took control over the leased premises. The lease term continues through March 2032. In November 2025, we entered into an amendment to the lease agreement providing for the lease of approximately 4,600 square feet of additional office space. The lease amendment term continues through March 2032. See Note 7 Leases to our unaudited condensed financial statements for more information regarding such leases.

Previous wording

We enter into contracts in the normal course of business with CROs, CDMOs, and other third parties for clinical trials, preclinical research studies, and testing and manufacturing services. These contracts are cancelable by us upon prior written notice. Payments due upon cancellation consist primarily of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation. These payments are not included in the preceding table as the amount and timing of such payments are not known.

Current wording

We contract in the normal course of business with CROs, CDMOs, and other third parties for clinical trials, preclinical research studies, and testing and manufacturing services. These contracts are cancelable by us upon prior written notice. Payments due upon cancellation consist primarily of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation. These payments are not included in the preceding table as the amount and timing of such payments are not known.

Previous wording

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations, or cash flows is disclosed in Note 2 of our unaudited condensed financial statements appearing elsewhere in this Form 10-Q.

Current wording

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations, or cash flows is disclosed in Note 2 of our unaudited condensed financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. In accordance with GAAP, we evaluate our estimates and judgments on an ongoing basis, including those related to accrued research and development expenses, preferred stock warrant liabilities, and stock-based compensation. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Current wording

This management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our unaudited condensed financial statements. In accordance with GAAP, we evaluate our estimates and judgments on an ongoing basis, including those related to accrued research and development expenses, common stock warrant liabilities, and stock-based compensation. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Previous wording

There have been no material changes to our critical accounting estimates from those described under in “Management’s Discussion and Analysis of Financial Condition and Results of Operations– Critical Accounting Estimates” included in the Prospectus.

Current wording

There have been no material changes to our critical accounting estimates from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations– Critical Accounting Estimates” included in our Annual Report on Form 10-K for the year ended December 31, 2025.