FRACTYL HEALTH, INC.

Previous wording

Rejuva. We completed key preclinical in vivo studies to support clinical trial applications (“CTAs”) for RJVA-001, our lead gene therapy candidate and subsequently submitted CTAs for RJVA-001 in T2D to regulators in the EU (Netherlands) and Australia in the second half of 2025. In April 2026, we received CTA authorization in the Netherlands for RJVA-001, enabling initiation of the anticipated Phase 1/2 first-in-human study evaluating RJVA-001 in adults with inadequately controlled T2D. Subject to site activation, we expect to dose the first patient with RJVA-001 and report preliminary data in the second half of 2026. We also plan to conduct the study at sites in Australia, where a CTA has been submitted and regulatory feedback is expected in the third quarter of 2026. We also advanced RJVA-002, our dual GIP/GLP-1 gene therapy candidate, through preclinical development.

Current wording

In April 2026, we received clinical trial application (“CTA”) authorization in the Netherlands for RJVA-001, our lead gene therapy candidate, enabling initiation of the anticipated Phase 1/2 first-in-human study evaluating RJVA-001 in adults with inadequately controlled T2D. Subject to site activation, we expect to dose the first patient with RJVA-001 and report preliminary data in the second half of 2026. We also plan to conduct the study at sites in Australia. In July 2026, we received ethics committee approval in Australia. We also advanced RJVA-002, our dual GIP/GLP-1 gene therapy candidate, through preclinical development.

Previous wording

Management believes that our available cash and cash equivalents balance of $63.2 million as of March 31, 2026 will be sufficient to fund our operating expenses and capital expenditure requirements into early 2027. Importantly, we are well funded through multiple key clinical and regulatory milestones in 2026, including the anticipated topline six-month randomized data from the REMAIN-1 Pivotal Cohort, anticipated De Novo marketing application submission in post-GLP-1 weight maintenance, and initial dosing and preliminary data from our RJVA-001 clinical program. For additional information regarding our liquidity, funding requirements and going concern assessment, see “Funding Requirements and Going Concern” below and the section titled “Risk Factors” in our Annual Report.

Current wording

Management believes that our available cash and cash equivalents balance of $47.1 million as of June 30, 2026 will be sufficient to fund our operating expenses and capital expenditure requirements into early 2027. Importantly, we are well funded through multiple key clinical and regulatory milestones in 2026, including the anticipated topline six-month randomized data from the REMAIN-1 Pivotal Cohort, anticipated De Novo marketing application submission in post-GLP-1 weight maintenance, and initial dosing and preliminary data from our RJVA-001 clinical program. For additional information regarding our liquidity, funding requirements and going concern assessment, see “Funding Requirements and Going Concern” below and the section titled “Risk Factors” in our Annual Report.

Previous wording

Change in fair value of warrant liabilities was mainly a result of the fluctuation of the value of the underlying shares of our common stock. Change in fair value of the 2023 Notes were primarily driven by a combination of interest on the notes payable and the fluctuation of market interest rates.

Current wording

Change in fair value of warrant liabilities was mainly a result of the fluctuation of the value of the underlying shares of our common stock. The higher loss from the change in fair value of warrant liabilities during the three months ended June 30, 2026 was mainly related to the warrants issued as part of the equity financing completed in August 2025. Change in fair value of the 2023 Notes were primarily driven by a combination of interest on the notes payable and the fluctuation of market interest rates.

Previous wording

Research and development expenses decreased by $3.8 million, or 19.7%, during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease was primarily related to reduced spending on our Revita and Rejuva programs, as well as lower personnel-related expenses.

Current wording

Research and development expenses decreased by $11.2 million, or 27.5%, during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The decrease was primarily related to reduced spending on our Revita and Rejuva programs, as well as lower personnel-related expenses.

Previous wording

Revita-related expenses decreased by $1.7 million primarily driven by a $1.6 million reduction in clinical expenses, which was mainly due to reduced expenses associated with the REVITALIZE-1 study following our Strategic Reprioritization in the first quarter of 2025, partially offset by increased costs related to the ongoing REMAIN-1 study. Rejuva-related expenses decreased by $1.5 million, primarily driven by lower spending on drug product manufacturing and pre-clinical research activities, partially offset by costs incurred to advance the program toward clinical readiness. Personnel related expenses decreased by $0.6 million, primarily related to lower headcount as a result of our Strategic Reprioritization in the first quarter of 2025.

Current wording

Revita-related expenses decreased by $6.3 million primarily due to decreased clinical expenses. Rejuva-related expenses decreased by $4.0 million, primarily driven by lower spending on drug product manufacturing, device engineering, and pre-clinical research activities, partially offset by costs incurred to advance the program toward clinical readiness. Personnel-related expenses decreased by $1.0 million, primarily driven by lower headcount as a result of our strategic reprioritization in the first quarter of 2025.

Previous wording

Selling, general and administrative expenses during the three months ended March 31, 2026 were $5.2 million, consistent with $5.3 million during the three months ended March 31, 2025.

Current wording

Selling, general and administrative expenses during the six months ended June 30, 2026 were $10.5 million, consistent with the $10.3 million incurred during the six months ended June 30, 2025.

Previous wording

Other income, net, of $30.0 million during the three months ended March 31, 2026 was primarily attributable to a $30.1 million gain from the change in fair value of our warrant liabilities and $0.6 million of net interest income, partially offset by a $0.6 million loss from the change in fair value of the 2023 Notes. Other income, net, of $1.0 million during the three months ended March 31, 2025 was primarily attributable to a $0.8 million gain from the change in fair value of our warrant liabilities and $0.5 million of net interest income, partially offset by a $0.3 million loss from the change in fair value of the 2023 Notes.

Current wording

Other income, net, of $23.6 million during the six months ended June 30, 2026 was primarily attributable to a $24.6 million gain from the change in fair value of our warrant liabilities and $1.0 million of net interest income, partially offset by a $2.0 million loss from the change in fair value of the 2023 Notes. Other expense, net, of $0.8 million during the six months ended June 30, 2025 was primarily attributable to a $2.0 million loss from the change in fair value of the 2023 Notes, partially offset by a $0.5 million gain from the change in fair value of our warrant liabilities and $0.7 million of net interest income.

Previous wording

In addition to our results determined in accordance with U.S. GAAP, we also evaluate our performance using Adjusted EBITDA, a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) adjusted to exclude (i) interest income, net, (ii) depreciation expense, (iii) stock-based compensation expense, (iv) changes in the fair value of notes payable and (v) changes in the fair value of warrant liabilities.

Current wording

In addition to our results determined in accordance with U.S. GAAP, we also evaluate our performance using Adjusted EBITDA, a non-GAAP financial measure. We define Adjusted EBITDA as net loss adjusted to exclude (i) interest income, net, (ii) depreciation expense, (iii) stock-based compensation expense, (iv) changes in the fair value of notes payable and (v) changes in the fair value of warrant liabilities.

Previous wording

A reconciliation of net income (loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA is presented below.

Current wording

A reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA is presented below.

Previous wording

On September 7, 2023, we entered into a credit agreement, as amended from time to time (the “Credit Agreement”), with Symbiotic Capital Opportunities Holding, L.P. and Catalio Structured Opportunities AIV I LP (the “2023 Lenders”) that provided for term loans up to an aggregate principal amount of $45.0 million (the “2023 Notes”) in two tranches. The first tranche, with a principal amount of $30.0 million, was extended on September 7, 2023, resulting in net proceeds of approximately $28.4 million. The second tranche, with a principal amount of $15.0 million, would have been extended upon our achievement of certain operating and funding milestones as defined in the Credit Agreement, by July 31, 2024. Due to a shift in business strategy expansion to include the weight maintenance study, we decided not to pursue the milestones required to access the second tranche. As a result, the second tranche was not extended.

Current wording

On September 7, 2023, we entered into a credit agreement, as amended from time to time (the “Credit Agreement”), with Symbiotic Capital Opportunities Holding, L.P. and Catalio Structured Opportunities AIV I LP (the “2023 Lenders”) that provided for term loans up to an aggregate principal amount of $45.0 million (the “2023 Notes”) in two tranches. The first tranche, with a principal amount of $30.0 million, was extended on September 7, 2023, resulting in net proceeds of approximately $28.4 million. The second tranche, with a principal amount of $15.0 million, would have been extended upon our achievement of certain operating and funding milestones as defined in the Credit Agreement, by July 31, 2024. Due to a shift in business strategy to include the weight maintenance study, we decided not to pursue the milestones required to access the second tranche. As a result, the second tranche was not extended.

Previous wording

The outstanding balances under the 2023 Notes bear interest at a floating annual rate equal to the greater of 5.5% above the Wall Street Journal prime rate or 13.25%. On and prior to September 30, 2024, 6.0% of the interest is payable in kind and added to the outstanding principal amount of the 2023 Notes. Beginning September 30, 2026, we are required to make principal payments in the amount of 1.5% of the aggregate principal amount outstanding, including accrued PIK interest, each month. Under the terms of the Credit Agreement, the first principal payment date may be extended to September 30, 2027, at our election, if certain financing milestones as defined in the Credit Agreement are achieved on or prior to

Current wording

The outstanding balances under the 2023 Notes bear interest at a floating annual rate equal to the greater of 5.5% above the Wall Street Journal prime rate or 13.25%. On and prior to September 30, 2024, 6.0% of the interest is payable in kind and added to the outstanding principal amount of the 2023 Notes. Beginning September 30, 2026, we were required to make principal payments in the amount of 1.5% of the aggregate principal amount outstanding, including accrued PIK interest, each month. Under the terms of the Credit Agreement, the first principal payment date may be extended to September 30, 2027, at our election, if certain financing milestones as defined in the Credit Agreement are achieved on or prior to September 30, 2026. During 2024, we achieved the defined milestones and elected to extend the first principal payment date to September 30, 2027. In addition, upon any principal payment, we are required to make an additional payment to the 2023 Lenders of a 6.0% fee (the “Exit Fee”), over the principal and accrued PIK interest paid. The aggregate Exit Fee of the 2023 Notes should equal to 6.0% of the total commitment of $45.0 million plus all accrued PIK interest. All remaining outstanding principal balance, accrued interest and Exit Fee on the 2023 Notes shall be due and payable on the maturity date of September 7, 2028.

Previous wording

As of March 31, 2026, the balance of the 2023 Notes was carried at its fair value of $30.1 million.

Current wording

As of June 30, 2026, the balance of the 2023 Notes was carried at its fair value of $30.4 million.

Previous wording

On March 3, 2025, concurrently with the filing of the S-3 Registration Statement, we entered into a sales agreement with Jefferies LLC as sales agent (the “Sales Agreement”) and filed a prospectus supplement under an at-the-market offering (the “ATM Offering”) covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $100.0 million of our common stock. During the term of the ATM Offering, we issued and sold 4,701,960 shares of our common stock at a weighted average price of $1.53 per share, resulting in net proceeds of approximately $6.8 million, after deducting commissions and offering expenses. On March 23, 2026, we notified Jefferies LLC of our intention to terminate the Sales Agreement pursuant to its terms. As a result, the Sales Agreement was terminated effective April 6, 2026 and no further sales will be made thereunder after such date.

Current wording

On March 3, 2025, concurrently with the filing of the S-3 Registration Statement, we entered into a sales agreement with Jefferies LLC as sales agent (the “Sales Agreement”) and filed a prospectus supplement under an at-the-market offering (the “ATM Offering”) covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $100.0 million of our common stock. During the term of the ATM Offering, we issued and sold 4,701,960 shares of our common stock at a weighted average price of $1.53 per share, resulting in net proceeds of approximately $6.8 million, after deducting commissions and offering expenses. On March 23, 2026, we notified Jefferies LLC of our intention to terminate the Sales Agreement pursuant to its terms. As a result, the Sales Agreement was terminated effective April 6, 2026 and no further sales have been or will be made thereunder after such date.

Previous wording

All Tranche A Warrants were exercised or expired by December 31, 2025, and none remained outstanding as of March 31, 2026. No Tranche B Warrants were exercised during the three months ended March 31, 2026. As of March 31, 2026, Tranche B Warrants to purchase 21,147,002 shares of our common stock remained outstanding, each with an exercise price of $1.05 per share, subject to certain adjustments, and expiring on October 3, 2030.

Current wording

All Tranche A Warrants were exercised or expired by December 31, 2025. No Tranche B Warrants were exercised during the three and six months ended June 30, 2026. As of June 30, 2026, Tranche B Warrants to purchase 21,147,002 shares of our common stock remained outstanding, each with an exercise price of $1.05 per share, subject to certain adjustments, and expiring on October 3, 2030.

Previous wording

To date, we have financed our operations primarily through our equity and debt financings. We have a history of operating losses and had an accumulated deficit of $547.0 million as of March 31, 2026. Based on our current business plans, we believe that our available cash and cash equivalents of $63.2 million as of March 31, 2026, will be sufficient to fund our operating expenses and capital expenditure requirements into early 2027, through multiple key clinical and regulatory milestones. Our estimate as to how long we expect our existing cash and cash equivalents will be able to continue to fund our operating expenses and capital expenditure requirement is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we expect. However, we believe our existing cash resources will not be sufficient to fund our current operating plan for at least twelve months from the issuance date of this Quarterly Report on Form 10-Q. As a result, we have concluded that substantial doubt exists about our ability to continue as a going concern for at least one year after the date that these financial statements are issued. The accompanying unaudited interim condensed consolidated financial statements in this Quarterly Report on Form 10-Q have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The unaudited interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Current wording

To date, we have financed our operations primarily through our equity and debt financings. We have a history of operating losses and had an accumulated deficit of $572.6 million as of June 30, 2026. Based on our current business plans, we believe that our available cash and cash equivalents of $47.1 million as of June 30, 2026, will be sufficient to fund our operating expenses and capital expenditure requirements into early 2027, through multiple key clinical and regulatory milestones. Our estimate as to how long we expect our existing cash and cash equivalents will be able to continue to fund our operating expenses and capital expenditure requirement is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we expect. However, we believe our existing cash resources will not be sufficient to fund our current operating plan for at least twelve months from the issuance date of this Quarterly Report on Form 10-Q. As a result, we have concluded that substantial doubt exists about our ability to continue as a going concern for at least one year after the date that these financial statements are issued. The accompanying unaudited interim condensed consolidated financial statements in this Quarterly Report on Form 10-Q have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The unaudited interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Previous wording

Cash used in operating activities of $22.5 million for the three months ended March 31, 2026 was primarily driven by spending on our ongoing clinical studies, Rejuva-related research and clinical readiness activities, professional services related to our corporate and general administrative activities, as well as personnel-related expenses, including salaries, bonuses, and other compensatory benefits. Cash used in operating activities resulted primarily from our net income of $9.2 million adjusted for net non-cash expense of $27.2 million, primarily consisting of a $30.1 million non-cash gain from the change in fair value of warrant liabilities, a $0.5 million non-cash gain from the change in fair value of notes payable, $2.5 million in stock-based compensation expense, $0.4 million non-cash operating lease expense, and $0.3 million depreciation expense. Cash used in operating activities was also impacted by changes in working capital and other assets and liabilities of $4.5 million.

Current wording

Cash used in operating activities of $38.4 million for the six months ended June 30, 2026 was primarily driven by spending on our ongoing clinical studies, Rejuva-related research and clinical readiness activities, professional services related to our corporate and general administrative activities, as well as personnel-related expenses, including salaries, bonuses, and other compensatory benefits. Cash used in operating activities resulted primarily from our net loss of $16.3 million adjusted for net non-cash activities of $18.1 million. These non-cash activities primarily consisted of a $24.6 million non-cash gain from the change in fair value of warrant liabilities, a $0.1 million non-cash gain from the change in fair value of notes payable, $5.0 million in stock-based compensation expense, $0.9 million non-cash operating lease expense, and $0.6 million depreciation expense. Cash used in operating activities was also impacted by changes in working capital and other assets and liabilities of $3.9 million.

Previous wording

Cash used in operating activities of $25.1 million for the three months ended March 31, 2025 was primarily driven by spending on our ongoing clinical studies, Rejuva-related research activities, professional services related to our corporate and general administrative activities, as well as personnel-related expenses, including salaries, bonuses, and other compensatory benefits. Cash used in operating activities resulted primarily from our net loss of $23.7 million adjusted for net non-cash expense of $0.6 million, primarily consisting of $1.4 million in stock-based compensation, $0.4 million non-cash operating lease expense and $0.3 million depreciation, offset by $0.8 million non-cash gain from the change in fair value of warrant liabilities and $0.8 million non-cash gain from the change in fair value of notes payable. Cash used in operating activities was also impacted by changes in working capital and other assets and liabilities of $1.9 million.

Current wording

Cash used in operating activities of $46.3 million for the six months ended June 30, 2025 was primarily driven by spending on our ongoing clinical studies, Rejuva-related research activities, professional services related to our corporate and general administrative activities, as well as personnel-related expenses, including salaries, bonuses, and other compensatory benefits. Cash used in operating activities resulted primarily from our net loss of $51.6 million adjusted for net non-cash activities of $4.0 million. These non-cash activities primarily consisted of $3.2 million in stock-based compensation, $0.8 million non-cash operating lease expense and $0.6 million depreciation, partially offset by $0.5 million non-cash gain from the change in fair value of warrant liabilities and $0.2 million non-cash gain from the change in fair value of notes payable. Cash used in operating activities was also impacted by changes in working capital and other assets and liabilities of $1.3 million.

Previous wording

We didn’t have any investing related cashflow activities for the three months ended March 31, 2026. Cash used in investing activities for the three months ended March 31, 2025, was primarily related to the purchase of laboratory and manufacturing equipment.

Current wording

We did not have any investing related cashflow activities for the six months ended June 30, 2026. Cash used in investing activities for the six months ended June 30, 2025, was primarily related to the purchase of laboratory and manufacturing equipment.

Previous wording

Cash provided by financing activities of $4.1 million for the three months ended March 31, 2026 was related to proceeds received in January 2025 from Tranche A warrants that were exercised in December 2025. Cash provided by financing activities of $0.2 million for the three months ended March 31, 2025 was primarily driven by the proceeds of $0.3 million from stock option exercises, partially offset by $0.1 million of principal payments made on finance lease obligations.

Current wording

Cash provided by financing activities of $4.0 million for the six months ended June 30, 2026 was related to $4.1 million proceeds received in January 2026 from Tranche A warrants that were exercised in December 2025 and $0.2 million proceeds received from issuance of common stock under employee stock purchase plan, partially offset by $0.3 million principal payments made on finance lease obligations. Cash provided by financing activities of $1.7 million for the six months ended June 30, 2025 was primarily driven by net proceeds of $1.6 million from the issuance of common stock in connection with our ATM Offering and $0.3 million from stock option exercises, partially offset by $0.2 million of principal payments made on finance lease obligations.

Previous wording

As of March 31, 2026, our lease commitments reflect payments due for our operating and finance leases. The operating leases include our corporate office and laboratory space in Burlington, MA that will expire in June 2034. The finance leases represent leases of laboratory equipment used in our Rejuva pre-clinical activities. As of March 31, 2026, our future contractual commitments for our leases were $50.8 million, of which $50.1 million were related to our operating leases. For additional information on our leases and timing of future payments, please see Note 7— “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in this Quarterly Report on this Form 10-Q.

Current wording

As of June 30, 2026, our lease commitments reflect payments due for our operating and finance leases. The operating leases include our corporate office and laboratory space in Burlington, MA that will expire in June 2034. The finance leases represent leases of laboratory equipment used in our Rejuva pre-clinical activities. As of June 30, 2026, our future contractual commitments for our leases were $49.3 million, of which $48.8 million were related to our operating leases. For additional information on our leases and timing of future payments, please see Note 7— “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in this Quarterly Report on this Form 10-Q.