Atrium Therapeutics, Inc.

Notes to Condensed Financial Statements

Organization

Description of Business

Atrium Therapeutics, Inc. (“the Company,” “Atrium” or “we”) is a pre-clinical stage biopharmaceutical company focused on developing the delivery of ribonucleic acid (“RNA”) therapeutics to the heart muscle for people living with cardiomyopathies. Atrium’s proprietary technology leverages the RNA delivery platform initially developed at Avidity Biosciences, Inc. (“Former Parent” or “Avidity”), which combines the tissue selectivity of monoclonal antibodies (“mAbs”) and other targeted delivery ligands with the precision of oligonucleotides. The Company was incorporated in Delaware in September 2025. The Company’s headquarters and operations are located in San Diego, California and it operates inone segment.

Agreement and Plan of Merger & Separation and Distribution Agreement

In October 2025, Avidity entered into an Agreement and Plan of Merger with Novartis AG (“Novartis”) and Ajax Acquisition Sub, Inc., a wholly owned subsidiary of Novartis (“Merger Sub”), pursuant to which Merger Sub merged with and into Avidity (the “Merger”), with Avidity surviving as an indirect wholly owned subsidiary of Novartis.

In connection with the Merger, Avidity entered into a Separation and Distribution Agreement (the “Separation Agreement”) with Atrium, a newly formed Delaware corporation and wholly owned subsidiary of Avidity, and Novartis. Pursuant to the Separation Agreement, Avidity undertook a pre-closing reorganization (the “Separation”) to transfer to the Company all assets and liabilities related to its early-stage precision cardiology programs and certain collaboration, license and research agreements. Avidity retained all other assets and liabilities.

Following the Separation, on February 26, 2026, Avidity distributed all the outstanding shares of the Company’s common stock, par value $0.001 per share (“common stock”) to Avidity’s stockholders on a pro rata basis (the “Spin-Off”). Each holder of the Former Parent’s common stock, par value $0.0001 per share (“Former Parent Common Stock”) received 1 share of common stock for every 10 shares of the Former Parent's Common Stock held of record as of the close of business, Eastern Time, on February 12, 2026. In the Spin-Off,15,514,966 shares of common stock were distributed to holders of the Former Parent's Common Stock.

Additionally, in the Spin-Off, holders of options to purchase shares of the Former Parent's Common Stock (the “Former Parent Stock Options”) and holders of restricted stock units denominated in shares of the Former Parent's Common Stock, whether subject to time-based or performance-based vesting, that were granted under any equity plans, agreements or arrangements of the Former Parent (“Former Parent RSUs” and together with the Former Parent Stock Options, the “Former Parent Equity Awards”) received a non-transferable Make Whole Award that will be settled in shares of common stock at a ratio of 1 share of common stock for every 10 shares of the Former Parent Common Stock underlying each such Former Parent Equity Award, as required by the terms of the Separation Agreement and as permitted by the Securities and Exchange Commission’s (the “SEC”) Staff Legal Bulletin No. 4. The Company granted Make Whole Awards to certain holders of Former Parent Equity Awards for an aggregate of 1,590,677 shares of its common stock, which awards were outstanding as of March 31, 2026. These awards are required to be settled as soon as administratively practicable after the effective time of the Spin-Off, but in no event after March 15, 2027. See Note 6.

From and after the completion of the Spin-Off, the Company continues to operate as an independent, publicly traded company. The Company was capitalized with $270.0 million in cash, less the sum of the amount of marketable securities and cash, cash equivalents and restricted cash contained in any accounts owned by the Company as of the close of business on the day prior to the date of the Spin-Off. The Company is led by a dedicated management team and board of directors. Avidity hasno continuing ownership interest in the Company following the Spin-Off.

In connection with the Spin-Off, the Company entered into various agreements relating to transition services, licenses and certain other matters with the Former Parent. For additional information regarding these agreements, see Note 7.

Liquidity

The Company has devoted substantially all its efforts to therapeutic drug discovery and development. The Company has historically been dependent upon Avidity for all its working capital and financing requirements as Avidity used a centralized approach to cash management and financing of its operations. The Company has incurred recurring losses since its inception and expects to continue to generate operating losses for the foreseeable future. As of March 31, 2026, the Company had retained earnings of $12.1 million and cash and cash equivalents of $267.8 million.

The Company believes that existing cash and cash equivalents will be sufficient to fund the Company’s operations for at least 12 months from the date of the filing of this Quarterly Report on Form 10-Q. The Company’s operations are subject to risks and uncertainties common to early-stage biotechnology companies, including, but not limited to, the ability to progress product candidates through pre-clinical development, the development of new technological innovations by competitors, reliance on key personnel, protection of proprietary technology, compliance with regulatory requirements, and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts may require substantial capital, personnel, and infrastructure. Even if development efforts are successful, there is no assurance that the Company will generate significant revenue from product sales.

The Company plans to finance its future cash needs primarily to support its longer‑term development activities through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses, and other similar arrangements. The timing and terms of any such transactions, if pursued, will depend on market conditions and other factors.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed financial statements have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("U.S. GAAP") and the rules and regulations of the SEC. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations.

In February 2026, the Company became a standalone publicly traded company, and its financial statements are now presented on a standalone basis. Prior to the Separation in February 2026, the Company’s historical financial statements were derived from the Former Parent’s financial statements and accounting records and were presented on a combined basis. The financial statements for all periods presented, including the historical results of the Company prior to February 27, 2026, are now referred to as “Condensed Financial Statements.”

For periods prior to the Separation, the accompanying condensed financial statements present, on a historical basis, the assets, liabilities, expenses and cash flows directly attributable to Atrium, which have been prepared from the Former Parent’s consolidated financial statements and accounting records, and are presented on a stand-alone basis as if the operations had been conducted independently from the Former Parent.

Certain information and footnote disclosures typically included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these unaudited condensed financial statements should be read in conjunction with the Company’s audited annual combined financial statements and the notes thereto for the year ended December 31, 2025, which are included in Exhibit 99.1 to the Company's Registration Statement on Form 10-12B/A, as amended (File No. 001-43008), which was filed with the SEC and became effective on February 26, 2026 (the “Form 10”).

Cash, Cash Equivalents and Restricted Cash

The Company considers cash equivalents to be only those investments which are highly liquid, readily convertible to cash and have an original maturity of three months or less at the date of purchase.

The Company issued letters of credit primarily under certain lease agreements that have been collateralized by cash deposits for an equal amount and are recorded within restricted cash on the condensed balance sheets based on the term of the underlying lease.

The Company invests excess cash in money market funds, which are carried at fair value and comprised all marketable securities as of March 31, 2026. Money market funds are highly liquid and actively traded marketable securities that meet the definition of and are accounted for as cash equivalents. The Company did not sell any marketable securities during the period.

Concentration of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash and the collaboration receivable. The Company maintains accounts in federally insured financial institutions in excess of federally insured limits. The Company also holds money market funds that are not federally insured. However, management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held and of the money market funds and other entities in which these investments are made.

The Company has contractual payment terms with each of its collaborators, and the Company monitors their financial performance and credit worthiness so that it can properly assess and respond to any changes in their credit profile. To date, there have been no write-offs or allowances of collaboration receivables.

Fair Value of Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs and is as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly.

Level 3—Inputs that are significant to the fair value measurement and are unobservable (i.e. supported by little market activity), which requires the reporting entity to develop its own valuation techniques and assumptions.

The carrying values of collaboration receivable, prepaid assets, accounts payable, and accrued liabilities approximate their fair values due to the short-term nature of these assets and liabilities.

Stock-based compensation expense represents the cost of the grant date fair value of employee stock option grants recognized over the requisite service period of the awards (usually the vesting period) on a straight-line basis.

Stock-based compensation expense for stock option grants is determined using the Black-Scholes option pricing model and is recorded at the estimated fair value of the award as of the grant date and recognized as expense on a straight-line basis over the requisite service period (usually the vesting period) of the stock-based award. Stock-based compensation expense for restricted stock units is recorded at the market price of a share of Company's stock on the date of grant and is recognized as expense on a straight-line basis over the service period. The estimation of fair value for stock-based compensation requires management to make estimates and judgments about, among other things, the estimated life of options and volatility of the Company’s common stock. These judgments directly affect the amount of compensation expense that will be recognized. Forfeitures are accounted for as incurred.

The Black-Scholes option-pricing model requires the use of subjective assumptions, including the risk-free interest rate, the expected stock price volatility, the expected term of stock options, and the expected dividend yield. The Company has limited historical stock option activity and therefore estimates the expected term of stock options granted using the simplified method, which represents the average of the contractual term of the stock option and its weighted-average vesting period. As there is limited trading history for the Company’s common stock, the Company has determined expected volatility based on the average historical stock price volatility of comparable publicly-traded companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The comparable companies are chosen based on their similar size, stage in the life cycle or area of therapeutic focus. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The risk-free interest rate assumption was based on the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield assumption is zero as the Company has never paid and has no plans to pay dividends on its common stock in the foreseeable future. The fair value of the underlying common stock used within the Black-Scholes option-pricing model is based on the closing price of common stock on the date of grant.

Stock-Based Compensation for Periods Prior to the Spin-Off

Prior to the Spin-Off, certain of the Company’s employees have historically participated in the Former Parent’s non-cash stock-based compensation plans. Non-cash stock-based compensation expense for periods prior to the Spin-Off has been allocated to the Company based on a proportionate cost allocation method primarily based on a percentage of the operating expense.

Net Loss Per Share

Basic net loss per share of common stock is calculated by dividing net loss by the weighted-average shares outstanding during the period. For purposes of the diluted net loss per share calculation, common stock options are potential shares of common stock that are evaluated under the treasury stock method and have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for all periods presented.

Net loss per share for periods prior to the Spin-Off was calculated based on the approximately 15.5 million shares of common stock distributed to the Former Parent's stockholders at the time of the Spin-Off, in addition to approximately 1.6 million of Make Whole Awards granted at the time of the Spin-Off that will be settled in common stock based only on the passage of time. The common stock and Make Whole Awards are assumed to be outstanding throughout all periods presented up to and including February 27, 2026. The same number of shares is being utilized for the calculation of basic and diluted loss per share for all periods presented prior to the Spin-Off.

Recently Issued Accounting Pronouncements Not Yet Adopted

Disaggregation of Income Statement Expenses

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (“ASU 220-40”), to improve the disclosures of expenses by requiring public business entities to provide further disaggregation of relevant expense captions (i.e., employee compensation, depreciation, intangible asset amortization) in a separate note to the financial statements, a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and the total amount of selling expenses and, in an annual reporting period, an entity’s definition of selling expenses. The transition method is prospective with the retrospective method permitted, and ASU 220-40 will be effective for the Company for its annual period ending December 31, 2027 and interim periods for the interim period beginning January 1, 2028. The Company is currently evaluating the impact on its disclosures.

Intangibles -Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), which eliminates the project stage model and introduces a probable-to-complete recognition threshold for the capitalization of software development costs. The amendment in the update requires an assessment of uncertainty associated with software development activities, additional disclosures for capitalized internal-use software costs and consideration of website development costs. ASU 2025-06 is effective for annual periods beginning after December 15, 2027. ASU 2025-06 can be applied prospectively, through a modified transition approach, or retrospectively, and early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes.

Fair Value Measurements

The following tables summarize the Company’s financial assets that are measured at fair value on a recurring basis (in thousands):

Money market funds are highly liquid and actively traded marketable securities that generally transact at a stable $1.00 net asset value representing its estimated fair value.

As of December 31, 2025, the Company heldno financial instruments measured at fair value.

Collaboration, License and Research Agreements

Research Collaboration and License Agreement and Securities Purchase Agreement with Bristol Myers Squibb Company

In November 2023, Avidity entered into a Research Collaboration and License Agreement (the “BMS Collaboration Agreement”) with Bristol Myers Squibb Company (“BMS”) to expand on its research with MyoKardia Inc. (“MyoKardia”). The Company assumed the BMS Collaboration Agreement as part of the Separation. In connection with the BMS Collaboration Agreement, the Company recognized revenue of $19.6 million and $1.6 million for the three months ended March 31, 2026 and 2025, respectively. The Company recognized revenue of $4.6 million and $1.6 million for the three months ended March 31, 2026 and 2025, respectively, for R&D services performed based on an effort to satisfy the performance obligation. As of March 31, 2026, the Company recorded a collaboration receivable of $15.0 million as the result of the successful delivery of a development candidate for the first licensed compound targeting a cardiology indication under the BMS Collaboration Agreement. The Company recognized the $15.0 million as collaboration revenue for the three months ended March 31, 2026.

As of March 31, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations under the Company’s collaboration agreements consisted solely of fixed consideration related to ongoing research and development services under the BMS Collaboration Agreement. The Company expects to recognize this remaining fixed consideration as revenue over the remaining research term as services are performed.

The variable consideration related to the remaining milestone payments has not been included in the transaction price as these were fully constrained at March 31, 2026. As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of the milestones is outside the control of the Company and contingent upon BMS efforts. Any variable consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as they were determined to relate predominantly to the license granted to BMS. The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Research Collaboration and License Agreement with Eli Lilly and Company

In April 2019, Avidity entered into a Research Collaboration and License Agreement (the “Lilly Agreement”) with Eli Lilly and Company (“Lilly”) for the discovery, development and commercialization of Antibody Oligonucleotide Conjugates TM (“AOC”) products directed against certain targets in immunology and other select indications on a worldwide basis. The Company recognizedno revenue for the three months ended March 31, 2026 and 2025, respectively. In August 2025, Lilly paid Avidity $10.0 million as the result of the achievement of a clinical development milestone under the Lilly Agreement for a collaboration target. The Company assumed the Lilly Agreement as part of the Separation.

There wasno collaboration receivable related to the Lilly Agreement as of March 31, 2026 and December 31, 2025. There wasno deferred revenue related to the Lilly Agreement at March 31, 2026.

The variable consideration related to the remaining milestone payments has not been included in the transaction price as these were fully constrained at March 31, 2026. As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of the milestones is outside the control of the Company and contingent upon Lilly efforts. Any variable consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as they were determined to relate predominantly to the license granted to Lilly. The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Collaboration, License and Research Agreement Activity

The amounts received that have not yet been recognized as revenue are deferred on the Company's condensed balance sheet and will be recognized over the remaining research and development period until the performance obligation is satisfied. A reconciliation of the closing balance of deferred revenue related to all collaboration agreements for thethree months ended March 31, 2026 and 2025 is as follows (in thousands):

Disaggregation of Collaboration Revenue

The Company disaggregates collaboration revenue by significant collaboration partner, which reflects differences in the nature of the promised goods and services and the timing of revenue recognition. Collaboration revenue for the three months ended March 31, 2026 and 2025 was solely related to the BMS Collaboration Agreement.

Avidity License Agreement

Avidity retained all intellectual property and data that were not exclusively related to cardiology, except for certain platform‑related intellectual property that will initially be owned by the Company, subject to Avidity’s right to obtain an assignment of such intellectual property and to grant back a license to the Company. As a result, a substantial portion of the intellectual property and data material to the Company’s cardiology programs is owned by Avidity and remains subject to certain existing third‑party obligations. Accordingly, in connection with the Spin‑Off, the Company entered into a license agreement with Avidity (the “Avidity License Agreement”) pursuant to which the Company obtained rights to access and use such intellectual property and data for the continued development and commercialization of its cardiology programs.

Accrued Liabilities

Accrued liabilities consisted of (in thousands):

Shareholders' Equity

Issuance of Shares of Common Stock in connection with the Separation from the Former Parent and Make Whole Awards

The Former Parent distributed 15,514,966 shares of the Company's common stock to the Former Parent's stockholders on February 26, 2026. Pursuant tothe Separation, holders of Former Parent Equity Award as of the Record Date received a non-transferable Make Whole Award pursuant to the 2026 Plan with respect to an aggregate of 1,590,677 shares of Company common stock. The Make Whole Awards were granted at a ratio of 1 shareof Company common stockper 10 shares of Former Parent Common Stock underlying Former Parent Equity Award. Under the 2026 Plan, the Company granted the Make Whole Awards to all holders of outstanding Former Parent RSUs and Former Parent Stock Options who were service providers at the time of such grants. Common stock distributed by the Former Parent in the Spin-Off and the shares of common stock issuable upon vesting of the Make Whole Awards to holders of Former Parent Equity Award constituted all of the issued and outstanding common stock immediately after the Separation.

2026 Incentive Award Plan

The Company’s 2026 Incentive Award Plan (the “2026 Plan”) was approved by its board of directors on February 26, 2026, and became effective on February 26, 2026. The 2026 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards and dividend equivalent rights to the Company’s officers, employees, directors and consultants. The number of shares initially reserved for issuance under the 2026 Plan was 2,909,446, which shall be cumulatively increased each January 1 beginning January 1, 2027 and ending on and including January 1, 2036, by the lesser of 5% of the number of shares of the Company’s common stock outstanding (including any shares issuable pursuant to pre-funded warrants) on the immediately preceding December 31 or such lesser number of shares determined by the Company’s board of directors. As of March 31, 2026, there were 1,218,769 shares remaining available for issuance under the 2026 Plan.

2026 Employee Stock Purchase Plan

The Company's 2026 Employee Stock Purchase Plan (the “2026 ESPP”) was approved by its board of directors on February 26, 2026, and became effective on February 26, 2026. A total of 171,144 shares of common stock were initially reserved for issuance under the 2026 ESPP, which shall be cumulatively increased each January 1 beginning January 1, 2027 and ending on and including January 1, 2036, by the lesser of (i)1% of the number of shares of the Company’s common stock outstanding (including any shares issuable pursuant to pre-funded warrants) on the immediately preceding December 31 or (ii) such lesser number of shares determined by the Company’s board of directors. The 2026 ESPP allows eligible employees to purchase shares during certain offering periods. No shares have been purchased under the 2026 ESPP as of March 31, 2026.

The Company has stock-based compensation plans under which it granted stock options and restricted stock units. Prior to February 27, 2026, stock-based compensation had been allocated to the Company by using a proportional cost allocation method primarily based on a percentage of the operating expenses attributable to the Company. The amounts presented are not necessarily indicative of future awards and do not necessarily reflect the costs that the Company would have incurred as an independent company for the periods presented.

Stock‑based compensation expense during the Spin-Off period primarily relates to accelerated vesting of equity awards in connection with the Spin-Off, including Make Whole Awards. For the period subsequent to the Company becoming a standalone company in February 2026, stock‑based compensation expense exclusively related to stock option grants to members of the Company's board of directors. The Company didnot grant any equity awards to employees or non-employees during this period.

Stock-based compensation expense attributed to the Company as well as incurred by the Company by classification included withinthe condensed statements of operations and comprehensive loss was as follows (in thousands):

Related Party Transactions and Transactions with the Former Parent

Relationship with the Former Parent

Upon the effectiveness of the Spin-Off, the Former Parent ceased to be a related party to the Company and accordingly, no related party transactions or balances are reported subsequent to February 2026.

In February 2026, the Company entered into agreements with the Former Parent in connection with the Spin-Off, including the following:

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Separation and Distribution Agreement - sets forth the principal actions to be taken in connection with the Spin-Off, including the transfer of assets and assumptions of liabilities, and establishes certain rights and obligations between the Company and Avidity following the Spin-Off, including procedures with respect to claims subject to indemnification and related matters.

•

Transition Services Agreement - stipulates that the Company will provide certain transition services to Avidity, and Avidity will provide certain transition services to the Company.

Relationship with the Former Parent prior to the Spin-Off

Pursuant to the Separation Agreement, immediately prior to the Spin-Off the Former Parent made a cash contribution to the Company which resulted in a cash balance of approximately $270.0 million.

Prior to the Separation, the Company did not historically operate as a standalone business and the condensed financial statements were derived from the consolidated financial statements and accounting records of the Former Parent. The following disclosure summarizes activity between the Company and the Former Parent prior to the Separation, including the affiliates of the Former Parent that were not part of the Spin-Off.

Net Deficit of the Former Parent

The Company has not historically operated as a standalone business and the condensed financial statements are derived from the consolidated financial statements and accounting records of Avidity. The following disclosure summarizes activity between the Company and Avidity, including the affiliates of Avidity that are not part of the Spin-Off.

Net transfers from Avidity represent the net effect of transactions between Avidity and the Company prior to the Separation. The components of net transfers from Avidity are as follows (in thousands):

Cost Allocations

The condensed financial statements reflect allocations of certain expenses from the condensed consolidated financial statements of Avidity prior to the Spin-Off, including research and development expenses and general and administrative expenses. These allocations include, but are not limited to, executive management, employee compensation and benefits, facilities and operations, information technology, business development, financial services (such as accounting, audit, and tax), legal, insurance, and stock-based compensation.

These allocations to the Company are reflected in the condensed statements of operations and comprehensive loss as follows (in thousands):

Management believes these cost allocations are a reasonable reflection of services provided to, or the benefit derived by, the Company during the periods presented. The allocations may not, however, be indicative of the actual expenses that would have been incurred had the Company operated as a standalone public company. Actual costs that may have been incurred if the Company had been a standalone public company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by the Company employees, and strategic decisions made in areas such as research and development, information technology and infrastructure.

Prior to the Spin-Off, the Company participated in Avidity’s share-based compensation plans, the costs of which have been allocated to the Company and recorded in research and development and general and administrative expenses in the condensed statements of operations and comprehensive loss. Refer to Note 6 for additional information.

Segment Information

The Company’s operations constitute asingle operating and reportable segment. The following table presents financial information, including significant segment expenses, which are regularly provided to the Chief Operating Decision Maker (“CODM”). The Company's CODM is the Chief Executive Officer, who utilizes net loss in assessing performance and allocating resources by comparing net loss against prior periods and the Company’s forecast. The measure of segment assets is reported on the condensed balance sheets as total assets. Research and development expenses and general and administrative expenses are adjusted to exclude depreciation and stock-based compensation for segment presentation. Other segment items include depreciation, stock-based compensation, other income, net (in thousands):

(1) Excludes depreciation and stock-based compensation expense.

(2) Excludes deferred revenue recognition and revenue accruals.

(3) Includes depreciation, stock-based compensation expense, interest income, and collaboration revenue recognized.

Net Loss Per Share of Common Stock

Basic net loss per share is calculated by dividing net loss by the weighted average number of shares outstanding for the period. Diluted net loss per share is calculated by dividing net loss by the weighted average number of shares of common stock and dilutive potential common stock outstanding during the period if the effect is dilutive. The Company's potential common stock includes outstanding stock options to purchase common stock.

In all periods presented, the Company’s outstanding stock options were excluded from the calculation of diluted net loss per share because their effect would be antidilutive. The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share amounts):

The following table presents the potential shares of common stock outstanding that were excluded from the calculation of diluted net loss per share for the periods presented because including them would have been anti-dilutive:

Subsequent Events

Inducement Plan

In April 2026, the Company’s Board of Directors approved the 2026 Employment Inducement Incentive Award Plan (the “Inducement Plan”). The Company reserved 310,000 shares of the Company's common stock to be used exclusively for grants of equity-based awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual's entry into employment.

The Inducement Plan provides for the grant of equity-based awards in the form of non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, and dividend equivalent rights. The Inducement Plan was approved without stockholder approval pursuant to NASDAQ Listing Rule 5635(c)(4).