Sensei Biotherapeutics, Inc.

1. ORGANIZATION AND OPERATIONS

Business

Sensei Biotherapeutics, Inc. (the “Company” or “Sensei”), a clinical-stage biotechnology company, was incorporated in 1999 as a Maryland corporation until being incorporated in Delaware on December 1, 2017. The Company is focused on improving outcomes for cancer patients through multi-node inhibition of critical oncogenic pathways. On February 17, 2026, Sensei acquired Faeth Holdings Therapeutics, Inc. (“Faeth HoldCo”) and its wholly owned subsidiary Faeth Therapeutics, LLC (“Faeth Subsidiary” and, together with Faeth HoldCo, “Faeth Therapeutics” or “Faeth”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated as of February 17, 2026, by and among the Company, its merger subsidiaries, Faeth HoldCo and Faeth Subsidiary (such transaction, the “Acquisition”).

Liquidity and capital resources

Since its inception, the Company has devoted substantially all of its resources to advancing development of its portfolio of programs, establishing and protecting its intellectual property, conducting research and development activities, organizing and staffing the Company, business planning, raising capital and providing general and administrative support for these operations. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Since its inception, the Company has incurred substantial losses and had a net loss of$170.2 million for the three months ended March 31, 2026. As of March 31, 2026, the Company had an accumulated deficit of$453.4 million. The Company expects to generate operating losses and negative operating cash flows for the foreseeable future.

The Company will need additional financing to support its continuing operations and pursue its current strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed would have a negative impact on the Company’s financial condition and its ability to pursue its business strategy. The Company will need to generate significant revenue to achieve profitability, and it may never do so.

As of March 31, 2026, the Company had$202.8 million of cash, cash equivalents and marketable securities. In February 2026, the Company completed a private placement financing through the sale of Series B Non-Voting Redeemable Convertible Preferred Stock (the "Series B Preferred Stock"), resulting in gross proceeds of $200 million.

The Series B Preferred Stock is subject to automatic conversion into Common Stock upon the third business day following the Company’s receipt of stockholder approval in accordance with Nasdaq listing rules. The Certificate of Designation of Preferences, Rights and Limitations of the Series B Non-Voting Convertible Preferred Stock (the “Certificate of Designation”) provides that, at any time following the earlier of (i) stockholder approval or (ii) six months after the initial issuance of the Series B Preferred Stock, if the Company fails to timely deliver shares of Common Stock to a converting holder in accordance with the terms of the Certificate of Designation, such holder may require the Company to pay cash in an amount equal to the fair value of the undelivered shares.

The Company’s ability to satisfy these potential cash settlement obligations is not entirely within its control, as it is contingent on, among other things, the Company’s ability to obtain stockholder approval and to deliver shares of Common Stock upon conversion within the timeframes required by the Certificate of Designation. If the Company is unable to obtain stockholder approval in a timely manner, or is otherwise unable to timely deliver shares of Common Stock upon conversion, holders who submit conversion notices after the applicable trigger date could require the Company to make significant cash payments that could substantially reduce the Company’s available cash resources.

After evaluating the conditions described above in the aggregate, the Company has concluded that there is substantial doubt about its ability to continue as a going concern. The accompanying consolidated financial statements have been prepared on the basis that the Company will continue to operate as a going concern within the twelve months after the date that these condensed consolidated financial statements are issued, which contemplates it will be able to realize assets and settle liabilities and commitments in the normal course of business for the foreseeable future. Accordingly, the accompanying condensed consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.

Reverse stock split

On June 16, 2025, at 5:00 p.m. Eastern Time, the Company effected a 1-for-20 reverse stock split of the Company’s issued and outstanding shares of common stock (the "Reverse Stock Split") and a corresponding reduction in the total number of authorized shares of its common stock from 250,000,000 shares to 12,500,000 shares, as authorized at the Company’s 2025 annual meeting of stockholders held on May 21, 2025 and approved by the Company’s board of directors on June 3, 2025. As a result of the Reverse Stock Split, every 20 shares of issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value of $0.0001 per share. No fractional shares were issued as a result of the Reverse Stock Split. Stockholders entitled to a fractional share received a cash payment based on the average closing sales price of the Company’s common stock on The Nasdaq Stock Market for the five trading days immediately preceding the filing date of the Certificate of Amendment. All historical share and per share amounts reflected throughout the financial statements have been adjusted to reflect the Reverse Stock Split. Proportionate adjustments were made to the per share exercise price and the number of shares of common stock that may be purchased upon exercise of outstanding stock options and warrants, the number of shares of common stock reserved for future issuance under the 2021 Equity Incentive Plan (the “2021 Plan”) and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company has prepared the accompanying condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States (“US GAAP”). The condensed consolidated financial statements include those accounts of the Company and its subsidiaries after elimination of all intercompany accounts and transactions. Certain reclassifications have been made to amounts presented in our condensed consolidated statements of operations and comprehensive loss for the period ended March 31, 2025 to conform to the presentation for the period ended March 31, 2026.

Unaudited Interim Financial Information

The condensed consolidated financial statements of the Company included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations, statement of stockholders’ equity, and cash flows for the interim periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from these condensed consolidated financial statements, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The results for any interim period are not necessarily indicative of results for any future period.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting periods presented. Estimates are used for, but are not limited to, stock-based compensation, accrued research and development expenses, depreciation of equipment, fair value of financial instruments, the Company’s ability to continue as a going concern, contingencies, and the valuation of consideration transferred in the acquisition of Faeth Therapeutics. Actual results may differ from those estimates.

Cash and Cash Equivalents

Cash equivalents are highly liquid investments with an original maturity of 90 days or less at the date of purchase and consist of time deposits, commercial paper, corporate bonds, and investments in money market funds with commercial banks and financial institutions. As of March 31, 2026, cash and cash equivalents included cash on deposit at commercial banks, a money market fund that invests in U.S. Government securities, commercial paper issued by highly rated corporate issuers, and short-term corporate bonds.

Marketable Securities

Investments consist of marketable securities with original maturities greater than 90 days at the date of purchase. The Company has classified its investments with maturities beyond one year as short-term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. The Company considers its investment portfolio of marketable securities to be available-for-sale. Accordingly, these investments are recorded at fair value (Level 2). Unrealized gains and losses are reported as the accumulated other comprehensive items in stockholders’ equity. Amortization and accretion of premiums and discounts are recorded in other income (expense). Realized gains or losses on debt securities are included in interest income or interest expense, respectively. If any adjustment to fair value reflects a decline in value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is other than temporary and, if so, marks the investment to market on the Company’s statement of operations and comprehensive loss.

Property and Equipment

Property and equipment are recorded at cost and depreciated or amortized over the estimated useful lives of the assets. Repairs or maintenance costs are expensed as incurred. Depreciation is computed using the straight-line method over the following estimated useful lives:

Leasehold improvements are depreciated over the shorter of their useful life or the life of the lease.

The Company accounts for acquisitions of assets or a group of assets that do not meet the definition of a business as asset acquisitions based on the cost to acquire the asset or group of assets, which include certain transaction costs. In an asset acquisition, the cost to acquire is allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values as of the acquisition date. No goodwill is recorded in an asset acquisition. Assets that are acquired in an asset acquisition for use in research and development activities that have an alternative future use are capitalized as in process research and development (“IPR&D”). Acquired IPR&D that has no alternative future use as of the acquisition date is recognized as research and development expense as of the acquisition date.

Redeemable Convertible Preferred Stock

The Company has classified its redeemable convertible preferred stock as temporary equity in the accompanying balance sheets due to redemption provisions that are outside of the control of the Company. Subsequent adjustments of the carrying values to the redemption values will be made only when it becomes probable that such a change in control event will occur. The Company did not accrete the carrying values of the redeemable convertible preferred stock to the redemption values as redemption is contingent on shareholder approval which is outside of the control of the Company.

Preferred Stock Warrants

The Company accounts for its redeemable convertible preferred shares warrants issued in connection with its various financing transactions based upon the characteristics and provisions of the instrument. Warrants that have been determined to be classified as liabilities are recorded on the balance sheet as a long term liability at their fair value on the date of issuance and remeasured to fair value at each reporting period, with the changes in fair value recognized in the change in fair value of warrant liabilities, net in the statements of operations and comprehensive loss. The Company adjusted the liability for changes in the fair value of these warrants until the earlier of the exercise of the warrants, the expiration of the warrants, or until such time as the warrants are no longer considered a liability.

Segments

The Company manages its operations as asingle segment, dedicated to improving outcomes for cancer patients by developing novel therapeutics, including through multi-node inhibition of critical oncogenic pathways. The Company’s Chief Operating Decision Maker(“CODM”), the President, reviews the operating results on an aggregate basis and manages the operations as a single operating segment. The CODM oversees performance assessment and resource allocation by reviewing net loss as reported in the Company’s consolidated statement of operations to guide operational decisions, strategic planning, and forecasting for future periods. To support this oversight, operating expenses are closely tracked to compare budget against actual results. As a single reporting segment, the significant operating expense categories regularly provided to the CODM include research and development, and general and administrative expenses. These expense categories are reported as separate line items in the Company’s consolidated statements of operations. All segment assets are reflected as ‘total assets’ in the consolidated balance sheet. All equipment, leasehold improvements, and fixed assets are located in the United States, and agreements with partners are denominated in U.S. dollars, unless otherwise noted.

Leases

At lease inception, the Company determines if an arrangement is or contains a lease, and if so, assesses the lease for classification as either an operating or finance lease. A lease is classified as a finance lease if any one of the following criteria are met: (i) the lease transfers ownership of the asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (iii) the lease term is for a major part of the remaining useful life of the asset, (iv) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset, or (v) the leased asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease. A lease is classified as an operating lease if it does not meet any of these criteria.

Leases with a term greater than one year are recognized on the balance sheet as right-of-use (“ROU”) assets and current and non-current lease liabilities, as applicable. Leases with a term of one year or less are expensed as rent in the period incurred. The Company elected not to separate lease and non-lease components for all underlying assets. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is determined by using the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the options. For leases that existed prior to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASC 842”), the Company used the remaining lease term to determine the appropriate incremental borrowing rate.

Recently Issued Accounting Standards

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard is intended to require more detailed disclosures about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact this standard will have on its condensed consolidated financial statements.

3. ACQUISITION OF FAETH AND PIPE ISSUANCE

On February 17, 2026, the Company acquired Faeth Therapeutics pursuant to the Merger Agreement.

Under the terms of the Merger Agreement, the Company issued to the stockholders of Faeth an aggregate of 10,497.0980 shares of Series B Preferred Stock, par value $0.0001 per share, representing 10,497,098 shares of common stock of the Company, par value $0.0001 per share (“Common Stock”), on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations. The outstanding warrant to purchase shares of Faeth Subsidiary capital stock was converted into a warrant to purchase an aggregate of 2.1020 shares of Series B Preferred Stock, representing a warrant to purchase 2,102 shares of Common Stock on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations. In addition, all outstanding options to purchase Faeth Subsidiary common stock were assumed by the Company and were converted into options to purchase an aggregate of 252,210 shares of Common Stock (the “Assumed Options”). In connection with the Acquisition, stock options to purchase 6,338,670 shares of Faeth common stock, held by certain Faeth employees, were immediately exercised by the Faeth employees, of which 4,273,182 options had their vesting accelerated. Faeth HoldCo paid $15.6 million to cover tax liabilities created by such exercise of the options.

Concurrently with the acquisition of Faeth Therapeutics, on February 17, 2026, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with new and returning investors to raise $200.0 million of gross proceeds in which investors were issued an aggregate of 14,440.395 sharesof Series B Preferred Stock, or 14,440,395 on an as-converted-to-common basis (without giving effect to any beneficial ownership limitations) at a price of $13,850 per share, or $13.85 per share on an as-converted-to-common basis, (collectively, the “2026 Private Placement”). The 2026 Private Placement closed on February 20, 2026.

Subject to the receipt of stockholder approval of the Company Stockholder Matters (as defined in the Merger Agreement as the “Parent Stockholder Matters”), each share of Series B Preferred Stock will automatically convert into 1,000 shares of Common Stock, subject to certain beneficial ownership limitations established by each holder. As a result of the transactions, equityholders of the Company immediately prior to the acquisition owned approximately 4.9% of the Common Stock, equityholders of Faeth Therapeutics immediately prior to the acquisition owned approximately 40.6% of the Common Stock and investors in the 2026 Private Placement owned approximately 54.5% of the Common Stock, in each case, calculated on a fully-diluted, as-converted-to-common basis (and without giving effect to any beneficial ownership limitations) using the treasury stock method and based on the implied equity values of the Company and Faeth Therapeutics.

The Acquisition was accounted for as an asset acquisition with the Company as the accounting acquirer. Upon completion of the Acquisition and the 2026 Private Placement, the Company obtained control of Faeth’s assets, consisting primarily of cash, prepayments of tax gross-up payments related to the accelerated vesting of options held by Faeth employees prior to the Acquisition, and acquired IPR&D. In accordance with Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”), under the asset acquisition method of accounting, the assets acquired and liabilities assumed are recognized and measured at fair value and no goodwill is recorded or recognized. Acquired IPR&D that has no future alternative use is expensed at the time of acquisition.

The estimated fair value of the consideration transferred of $145.8 million is summarized as follows (in thousands):

The fair value of the consideration transferred was measured using the price per share the investors paid as part of the 2026 Private Placement. The Assumed Options reflects the portion of the acquisition date fair-value based measure that relates to the pre-combination service period.

The following table summarizes the allocation of the estimated fair value of the consideration transferred to the net assets acquired by the Company (in thousands):

The Company recognized $4.8 million of research and development expenses and $6.2 million of general and administrative expenses related to the accelerated vesting of 4,273,182 options held by Faeth employees prior to the Acquisition during the three months ended March 31, 2026.

The Company recognized $9.1 million of research and development expenses and $6.5 million of general and administrative expenses for tax gross-up payments related to the vesting of these options. The Company acquired $11.4 million of prepaid expenses related to the tax gross-up payments included in the net assets acquired by the Company, which were recognized as expense during the three months ended March 31, 2026. The tax gross-up payments are not in scope for accounting under ASC 718 and are recognized in the period in which they are incurred.

For the Assumed Options that were not vested as of the Acquisition, the Company recognized $0.3 million and less than $0.1 million of general and administrative and research and development expenses respectively during the three months ended March 31, 2026.

4. MARKETABLE SECURITIES

Marketable securities consist of the following as of March 31, 2026 and December 31, 2025 (in thousands):

As of March 31, 2026, all marketable securities held by the Company had remaining contractual maturities ofone year or less.

There wereno impairments of the Company’s assets measured and carried at fair value during thethree months ended March 31, 2026.

As of March 31, 2026, an immaterial amount of unrealized losses were associated with marketable securities with contractual maturities ofone year or less.

5. FAIR VALUE MEASUREMENTS

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values (in thousands):

When developing fair value estimates, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. When available, the Company uses quoted market prices to measure fair value. The valuation technique used to measure fair value for the Company's Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices arenot available, the fair value measurement is based on models that use primarily market-based parameters including yield curves, volatilities, credit ratings and currency rates. In certain cases where market rate assumptions arenot available, the Company is required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument.

There wereno transfers among Level 1, Level 2 or Level 3 categories in thethree months ended March 31, 2026 and 2025.

Preferred Stock Warrant Liability

In September 2021, Faeth issued 10,550 warrants (the “Warrants”) to Western Alliance Bank (“Western Alliance”) to purchase shares of redeemable convertible Preferred Stock, at an exercise price of $1.42177. Western Alliance can exercise the Warrants until the termination of the agreement on September 6, 2031. Under the terms of the Merger Agreement, the Warrants were converted into warrants to purchase 2.1020 shares of Series B Preferred Stock. No Warrants were exercised as of March 31, 2026.

The Company concluded that the Warrants required liability classification based on the guidance in ASC 480. The Warrants were recorded at fair value using the Black-Scholes method with the following inputs:

The following table presents a roll-forward of the aggregate fair values of the Preferred Stock Warrant Liability (in thousands):

6. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following (in thousands):

Depreciation and amortization expense for the three months ended March 31, 2026 and 2025 was$29 thousand and$30 thousand, respectively.

During the three months ended March 31, 2025, the Company disposed of all research equipment through the sale of fixed assets, resulting in a reduction of the gross carrying amount tozero. The related accumulated depreciation of $1,078 thousand was written off in connection with this disposal. A gain of $23 thousand was recognized on the sale and is included in the other income (expense) line in the condensed consolidated statements of operations and comprehensive loss for the period.

7. COMMITMENTS AND CONTINGENCIES

Operating Leases

As of March 31, 2026, the Company leases office and laboratory facilities under operating leases, which expire at various dates through 2027. The Company has $0.7 million in letters of credit outstanding as security on certain of these leases. As part of its adoption of ASC 842, the Company recorded operating ROU assets and operating lease liabilities for these leases as of January 1, 2022. The Company elected the short-term lease recognition exemption for operating leases with an initial term of less than 12 months and therefore did not recognize the lease on the Company’s balance sheet. Rent expense was recognized on a straight-line basis over the lease term. Short-term lease expense for thethree months ended March 31, 2026 and 2025 was immaterial for both periods.

Finance Leases

The Company leases furniture under finance leases. The Company previously leased research equipment under finance leases, which were disposed of during the three months ended March 31, 2025.

The following table contains a summary of the lease costs recognized under ASC 842 pertaining to the Company’s finance and operating leases for thethree months ended March 31, 2026 and 2025 (in thousands):

During the three months ended March 31, 2025, the Company disposed of research equipment classified as a ROU asset under a lease agreement. The ROU asset was sold, resulting in a loss of $3 thousand, which is included in the other income (expense) line in the condensed consolidated statements of operations and comprehensive loss for the period.

The following table contains a summary of other information pertaining to the Company’s finance and operating leases for thethree months ended March 31, 2026 and 2025 (in thousands, except lease term and discount rate):

The following table presents the maturity of the Company’s operating and finance lease liabilities as of March 31, 2026 (in thousands):

License Agreements

In connection with the acquisition of Faeth Therapeutics, Inc. (the "Faeth Acquisition"), the Company assumed the following licensing agreements, each originally entered into by Faeth, to obtain the right to make, use, and sell licensed products currently in development.

Cornell University

In June 2020, Faeth entered into a license agreement (the “Cornell Agreement”) with Cornell University (“Cornell”), pursuant to which Faeth was granted an exclusive, sublicensable, royalty-bearing license to develop and commercialize products using the licensed combination therapy for PI3K associated diseases and disorders. In connection with the Faeth Acquisition, the Company assumed all of Faeth's rights and obligations under the Cornell Agreement. As consideration for the Cornell Agreement, the Company agreed to pay annual license fees of $0.1 million on the anniversary of the agreement. The license fees are recorded as research and development expense in the statements of operations and comprehensive loss as the acquired license represents in-process research and development with no alternative future use. Under the Cornell Agreement, the Company is required to pay up to an aggregate of $6.2 million upon the achievement of certain development and commercial milestones. The Company is also required to pay royalties to Cornell in the low to mid single digit percentage range based on net sales of licensed products. The development milestone payment will be recorded when the milestone is achieved, and the commercial milestone payment and royalties will be recorded when the sales occur. During thethree months ended March 31, 2026 and 2025, no payments were made for annual fees. As of March 31, 2026, no milestones were achieved.

Cancer Research Technology Limited (CRT)

In June 2020, Faeth entered into a license agreement (the “CRT Agreement”) with Cancer Research Technology Limited (“CRT”), who is wholly owned by Cancer Research UK, pursuant to which Faeth was granted an exclusive, sublicensable, royalty-bearing license to develop and commercialize FTH-002, or other products with dietary modulation of amino acids. In connection with the Faeth Acquisition, the Company assumed all of Faeth's rights and obligations under the CRT Agreement. As consideration for the CRT Agreement, the Company paid an upfront fee of $0.1 million in 2020 which was recorded as research and development expense in the statements of operations and comprehensive loss as the acquired license represents in-process research and development with no alternative future use. Under the CRT Agreement, the Company is required to pay up to an aggregate of £7.9 million related to the achievement of certain development and commercial milestones and up to an aggregate of £18.1 million related to the achievement of certain partnership milestones. In addition, the Company is required to pay royalties to CRT in the low to mid single-digit percentage range based on net sales of licensed products and sublicense royalty fees in the low double-digit percentage range for any revenue derived from sublicensing. The development milestone payment will be recorded when the milestone is achieved, and the commercial milestone payment, royalties, and sublicense revenues will be recorded when the sales occur. As of March 31, 2026, no milestones have been achieved.

Ravenna Pharmaceuticals (Takeda)

In February 2021, Faeth entered into the Ravenna Agreement, pursuant to which Faeth was granted intellectual property and existing data and agreements to develop and commercialize FTH-001 and FTH-003 in exchange for an upfront fee of $0.5 million. In connection with the Faeth Acquisition, the Company assumed all of Faeth's rights and obligations under the Ravenna Agreement. The upfront payment was recorded as research and development expense in the statements of operations and comprehensive loss because the acquired assets represented in-process research and development with no alternative future use.

As part of the Ravenna Agreement, the Company assumed the Takeda Agreement pursuant to which the Company is required to pay up to an aggregate of $124.0 million related to the achievement of certain development and commercial milestones. The Company is also required to pay royalties to Takeda in the low to mid-single-digit percentage range based on net sales of licensed products. The development milestone payment will be recorded when the milestone is achieved, and the commercial milestone payment, royalties, and sublicense revenues will be recorded when the sales occur. As of March 31, 2026, no milestones have been achieved.

As additional consideration under the Takeda Agreement, the Company was required to issue up to $15.0 million in equity to Takeda upon the first dosing in a Phase 3 clinical trial. In January 2026, this provision was renegotiated and removed in its entirety.

Calithera Biosciences (Millennium Takeda)

In May 2023, Faeth entered into a purchase agreement (the “Calithera Agreement”) with Calithera Biosciences (“Calithera”) under which Faeth was granted intellectual property and existing data and agreements to develop and commercialize FTH-001 and FTH-003. In connection with the Faeth Acquisition, the Company assumed all of Faeth's rights and obligations under the Calithera Agreement. As consideration for the Calithera Agreement, the Company paid an upfront fee of $0.4 million. The payments were recorded as research and development expense in the statements of operations and comprehensive loss because the acquired assets represented in-process research and development with no alternative future use.

As part of the Calithera Agreement, the Company assumed existing license agreements with the Regents of the University of California (the “University of California Agreement”) and Millennium Pharmaceuticals (the “Millennium Agreement”). Under the University of California Agreement, the Company is required to pay up to an aggregate of $1.0 million per licensed product related to the achievement of certain development and commercial milestones, of which $0.8 million remains unpaid as of March 31, 2026. The Company is also required to pay tiered low single-digit royalties based on net sales of licensed products and a low double-digit percentage based on sublicense income if the Company sublicenses the rights granted under the University of California Agreement. Under the Millennium Agreement, the Company is required to pay up to an aggregate of $119.0 million in development, regulatory and commercial launch milestone payments and up to an aggregate of $250.0 million in sales milestone payments. The Company is also required to pay tiered single-digit royalties based on annual net sales of licensed products. Under both agreements, the development milestone payment will be recorded when the milestone is achieved, and the commercial milestone payment and royalties will be recorded when the sales occur. As of March 31, 2026, no milestones have been achieved under either agreement.

Litigation

The Company records estimated losses from loss contingencies, such as a loss arising from litigation, when it determines that it is probable a liability has been incurred and the amount of loss can be reasonably estimated. Litigation is subject to many factors that are difficult to predict so that there can be no assurance, in the event of a material unfavorable result in one or more claims, the Company will not incur material costs.

8. ACCOUNTS PAYABLE AND CURRENT ACCRUED Expenses

Accounts payable and accrued liabilities consist of the following (in thousands):

9. redeemable Convertible Preferred stock

In conjunction with the Merger Agreement, on February 17, 2026, the Board adopted the Certificate of Designation, which authorized the issuance of 25,045 shares of Series B Preferred Stock, par value of $0.0001 per share.

Under the terms of the Merger Agreement, the Company issued to the stockholders of Faeth an aggregate of 10,497.0980 shares of Series B Preferred Stock, representing 10,497,098 shares of Common Stock on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations.

Concurrently with the Acquisition, the Company entered into the Purchase Agreement with new and returning investors to raise $200.0 million of gross proceeds in which investors were issued an aggregate of 14,440.395 shares of Series B Preferred Stock, or 14,440,395 on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations, at a price of $13,850 per share, or $13.85 per share on an as-converted-to-common basis. The 2026 Private Placement closed on February 20, 2026.

Subject to the receipt of stockholder approval of the Company Stockholder Matters, each share of Series B Preferred Stock will automatically convert into 1,000 shares of Common Stock, subject to certain beneficial ownership limitations established by each holder. As the Series B Preferred Stock contains a cash settlement provision that is outside the control of the Company, the Series B Preferred Stock is classified in temporary equity.

The holders of Preferred Stock have the following rights, preferences and privileges:

Voting Rights

Holders of the Series B Preferred Stock shall haveno voting rights. However, as long as any shares of Series B Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the majority of outstanding shares of Series B Preferred Stock (i) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock, (ii) issue further shares of Series B Preferred Stock or increase or decrease the number of authorized shares of Series B Preferred Stock, (iii) consummate either a merger or consolidation or other business combination in which stockholders of the Company do not hold at least a majority of the voting power, (iv) authorize or issue any class or series of stock that has powers, preferences or rights that are senior to those of the Series B Preferred Stock, or (v) amend, waive or modify the Merger Agreement in any manner that would be reasonably likely to prevent, impede or materially delay the stockholder approval or conversion of Series B Preferred Stock.

Dividends

Holders of outstanding shares of Series B Preferred Stock are entitled to receive dividends on shares of Series B Preferred Stock, on an as-converted basis to common stock, equal to and in the same form and manner as dividends paid on shares of common stock.

Liquidation Preference

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the corporation, the holders of shares of the Series B Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a holder of common stock would receive if the Series B Preferred Stock were fully converted to common stock and amounts shall be paid pari passu with all holders of Common Stock, plus an additional amount equal to any dividends declared on but unpaid to such shares.

Redemption

The Series B Preferred Stock does not have redemption rights. However, if the Company fails to obtain shareholder approval within six months of the initial issuance of Series B Preferred Stock, shares of Series B Preferred Stock become eligible for cash settlement at the option of the holder for a fair value equal to the closing price of the Company’s common stock on the last trading day prior to the date that the notice for cash settlement is delivered from the holder to the Company.

Conversion

Each share of Series B Preferred Stock shall automatically convert at a conversion ratio of 1,000 shares of common stock for each share of Series B Preferred Stock on the third business day after stockholder approval of the Company Stockholder Matters.

10. Equity

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are not entitled to receive dividends, unless declared by the board of directors.

Common Stock Warrants

There was no common stock warrant activity related to common stock warrants issued in conjunction with equity and debt fundraising events for the three months ended March 31, 2026. The following is a summary of the common stock warrants outstanding at March 31, 2026 and December 31, 2025:

11. STOCK-BASED COMPENSATION

2018 Equity Incentive Plan

The Company’s 2018 Stock Incentive Plan (the “2018 Plan”) provided for the Company to grant qualified incentive options, nonqualified options, stock grants and other stock-based awards to employees and non-employees to purchase the Company’s common stock. Upon the effectiveness of the 2021 Plan (as defined below), the Company ceased issuing new awards under the 2018 Plan.

2021 Equity Incentive Plan

The 2021 Plan became effective in February 2021. The 2021 Plan provides for the grant of incentive stock options to employees, including employees of any parent or subsidiary corporations, and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of stock awards to employees, directors, and consultants, including employees and consultants of the Company’s affiliates. The number of shares initially reserved for issuance under the 2021 Plan was 250,000 (5,000,000 prior to Reverse Stock Split), which began automatically increasing on January 1 of each calendar year, starting on January 1, 2022 through January 1, 2031, in an amount equal to 4.0% of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the board of directors. As of March 31, 2026,160,521 shares remained available for issuance pursuant to the 2021 Plan.

Accelerated Options From Acquisition of Faeth

On February 17, 2026, in connection with the Acquisition of Faeth, stock options to purchase 6,338,670 shares of Faeth common stock, held by certain Faeth employees, were immediately exercised by the Faeth employees, of which 4,273,182 options had their vesting accelerated (the “Accelerated Options”). The modification of the terms that resulted in the immediate vesting of the Accelerated Options was executed in contemplation of the Acquisition of Faeth and did not require continued employment or future service by the option holders. The Company recognized $4.8 million of research and development expenses and $6.2 million of general and administrative expenses upon the Acquisition of Faeth representing the fair value of the Accelerated Options on the date of the modification.

Assumed Options From Acquisition of Faeth

On February 17, 2026, in connection with the Acquisition of Faeth Therapeutics, the Company assumed all outstanding and unexercised stock options to purchase an aggregate of 252,210 shares of common stock. The Assumed Options were converted into options to purchase shares of the Company's common stock using an exchange ratio of approximately 0.1993, with exercise prices ranging from $1.16 to $5.22 per share on an as-converted basis. The Company recognized $0.5 million representing the fair value of the Assumed Options attributable to the pre-combination service period as part of the consideration transferred. The remaining unrecognized compensation expense associated with the unvested Assumed Options will be recognized over their remaining service periods, which range from approximately 0.1 to 3.5 years. See Note 3 for additional information regarding the Acquisition.

Inducement Grants

In connection with the Acquisition, the Company granted inducement nonstatutory stock options to purchase an aggregate of 2,319,891 shares of common stock to former Faeth employees on February 19, 2026, at an exercise price of $27.22 per share, as a material inducement to entering employment with the Company. In addition, on March 11, 2026, the Company granted an inducement nonstatutory stock option to purchase 166,435 shares of common stock at an exercise price of $29.37 per share to a new employee as a material inducement to entering employment with the Company. These stock options will vest over afour-year period, with 25% of the shares underlying each option award vesting on theone-year anniversary of the applicable employees’ new hire date and the remaining 75% of the shares underlying each option award vesting monthly thereafter forthree-years. Vesting of each option award is subject to such employee’s continued service with the Company through the applicable vesting dates. These stock options were granted outside of the 2021 Plan as an inducement material to each employee’s acceptance of employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4).

2021 Employee Stock Purchase Plan

The 2021 ESPP became effective in February 2021. A total of 16,666 shares (333,333 prior to Reverse Stock Split) of common stock were initially reserved for issuance under the 2021 ESPP, which will automatically increase on January 1 of each calendar year, beginning on January 1, 2022 through January 1, 2031, by an amount equal to 1.0% of the total shares of common stock outstanding on December 31st of the preceding calendar year. The purchase price of the shares under the 2021 ESPP are at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the purchase date. As of March 31, 2026, the Company had issued 12,220 shares under the 2021 ESPP, and 72,853 shares were available to be issued under the same plan.

Stock Options

The Company has granted options to purchase shares of common stock to employees pursuant to the 2021 Plan at a weighted average grant date fair value of$7.02 per share during the three months ended March 31, 2026. The Company uses the Black-Scholes option-pricing model to estimate the fair value of the stock options on the applicable grant dates.

The following is a summary of option activity for employee awards under the 2018 Plan, the 2021 Plan and inducement grants for thethree months ended March 31, 2026:

The aggregate intrinsic value of the outstanding stock option awards is calculated as the difference between the exercise price and the market price of the Company’s common stock at March 31, 2026. The aggregate intrinsic value of stock options exercised in the three months ended March 31, 2026 was$1.2 million and there wereno option exercises for thethree months ended March 31, 2025.

The grant date fair value of options vested during the three months ended March 31, 2026 and 2025 was$0.4 million and $0.6 million, respectively.

At March 31, 2026, there was$57.4 million of unrecognized stock-based compensation expense associated with the stock options, which is expected to be recognized over a weighted-average period of 3.77 years.

Restricted Stock Units

The Company has granted restricted stock units with service-based vesting conditions.

The following is a summary of the restricted stock unit activity during thethree months ended March 31, 2026:

Pursuant to the 2021 Plan, the Company has historically granted restricted stock units which vest annually over a period ofone, two, three orfour years. The Company granted no restricted stock units during thethree months ended March 31, 2026.

As of March 31, 2026, unrecognized stock-based compensation expense associated with the restricted stock units was immaterial and is expected to be recognized over a weighted-average period of 0.88 years.

Common Stock Warrants

The following is a summary of the common stock warrant activity during thethree months ended March 31, 2026:

As of March 31, 2026 there wasno unrecognized stock-based compensation expense associated with the common stock warrants.

For the three months ended March 31, 2026 and 2025, respectively, the Company utilized the Black-Scholes option-pricing model for estimating the fair value of the stock options and common stock warrants granted. The following table presents the assumptions and the Company’s methodology for developing each of the assumptions used:

•

Volatility—The Company lacks sufficient Company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies in addition to its own historical volatility and will continue to do so until it has adequate historical data regarding the volatility of its own traded stock price.

•

Expected term—The Company calculates the expected term of options using the simplified method, as the Company lacks relevant historical data due to the Company’s limited operating experience.

•

Risk-free interest rate—The risk-free rate for periods within the estimated life of the stock award is based on the U.S. Treasury yield curve in effect at the time of grant.

•

Dividend rate—The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future.

Stock-based compensation expense was recorded in the following line items in the condensed consolidated statements of operations for thethree months ended March 31, 2026 and 2025 (in thousands):

12. EMPLOYEE RETIREMENT PLAN

The Company maintains a defined contribution 401(k) plan (the “Plan”) for all employees. Under the Plan, participants may make voluntary contributions up to the maximum amount allowable by law. The Plan is based on employees’ salary deferral, and the Company matches employees’ contributions up to 4% of the employees’ base salary. Employees are 100% vested in the Company’s match contributions. During each of thethree months ended March 31, 2026 and 2025, the Company’s matching contributions were less than $0.1 million.

13. COMPENSATION AND EMPLOYEE BENEFITS

Compensation and employee benefits consist of the following (in thousands):

Other compensation related liabilities as of March 31, 2026 consisted primarily of $2.3 million of unpaid tax gross-up expenses related to the accelerated vesting of options held by Faeth employees prior to the Acquisition and $0.1 million of accrued salaries and wages. Other compensation related liabilities for the period ended March 31, 2026 consisted primarily of $0.1 million of accrued salaries and wages.

14. INCOME TAXES

The Company recordedno provision for income taxes for thethree months ended March 31, 2026 and 2025.

Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax bases of assets and liabilities using statutory rates. Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which are comprised principally of net operating loss carryforwards, equity-based compensation, research and development tax credit carryforwards, and capitalized research and development expenditures. Under the applicable accounting standards, management has considered the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of federal and state deferred tax assets. Accordingly, a full valuation allowance has been established against the Company’s otherwise recognizable net deferred tax assets.

15. NET LOSS PER SHARE

Basic and diluted net loss per share attributable to common stockholders is calculated as follows (in thousands, except share and per share amounts):

The following outstanding potentially dilutive securities have been excluded from the calculation of diluted net loss per share, as their effect is anti-dilutive:

16. RESTRUCTURING AND RELATED CHARGES

In November 2024, the Company announced a restructuring initiative to streamline operations and focus resources on advancing the clinical development of solnerstotug (the “2024 Restructuring”). As part of the 2024 Restructuring, the Company closed its research site in Rockville, Maryland, and reduced its workforce by approximately 46%, with the majority of reductions occurring in the preclinical research and development group. These actions were intended to extend the Company’s cash runway.

In October 2025, the Company announced it was exploring strategic alternatives. In November 2025, the Company’s Board of Directors approved a reduction in force of approximately 65% of the Company’s workforce (together with the October 2025 actions, the “2025 Restructuring”) to preserve capital while the Company evaluated potential mergers, asset sales, or other strategic transactions.

The 2024 Restructuring and 2025 Restructuring costs are primarily related to one-time termination benefits and ongoing benefit arrangements, both of which included severance payments and extended benefits coverage. Aggregate costs also included certain contract termination costs.

The following tables summarize the accrued liabilities activity recorded in connection with the 2024 Restructuring and 2025 Restructuring for the three months ended March 31, 2026 and 2025 respectively (in thousands):