LB PHARMACEUTICALS INC

Previous wording

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

Current wording

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

Previous wording

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

Current wording

We are also planning to conduct a Phase 2 clinical trial evaluating LB-102 as an adjunctive treatment in major depressive disorder (“aMDD”). Additional pipeline expansion is planned for LB-102 in new indications with strong mechanistic rationale and validating clinical and real-world experience from amisulpride, potentially including negative symptoms of schizophrenia (with potential for trial initiation in the second half of 2027, subject to regulatory feedback and other factors) and Alzheimer’s disease agitation/psychosis. We are also developing a long-acting injectable (“LAI”) formulation of LB-102, which may improve adherence, a common issue in patients with schizophrenia and bipolar disorder. LB-102 is a new chemical entity and a methylated derivative of amisulpride, a second-generation antipsychotic drug approved in over 50 countries. Amisulpride is not available in the United States because the development and regulatory requirements of the U.S. Food and Drug Administration (“FDA”), for amisulpride were incompatible with patent coverage on the drug. Amisulpride is a generic drug that has been extensively used in clinical practice following its initial approval in France in the 1980s, generating at least two million monthly prescriptions in 2023 in a subset of 16 continental European countries. Among these European prescriptions for amisulpride, our data suggest that approximately 60% are for schizophrenia and schizoaffective disorders and approximately 20% are for mood disorders and the remainder are for anxiety and a variety of other indications.

Previous wording

We designed LB-102 to address the limitations of amisulpride with the aim of creating a product candidate with the potential for a differentiated therapeutic profile and strong intellectual property protection. We believe LB-102’s mechanism of action, data from our recently completed Phase 2 trial (NOVA-1) of LB-102 in acute schizophrenia, and the heritage of clinical experience with amisulpride support the continued development of LB-102 in both psychosis and mood disorders. In the future, additional expansion opportunities for LB-102 may include predominantly negative symptoms of schizophrenia, Alzheimer’s disease psychosis and agitation, as well as other neuropsychiatric diseases. We believe that LB-102, if approved, can become a mainstay of psychiatric practice by offering a potentially attractive alternative to branded and generic therapeutics for the treatment of schizophrenia, bipolar depression, adjunctive MDD and other neuropsychiatric diseases, given the compelling balance of clinical activity and tolerability observed to date.

Current wording

We designed LB-102 to address the limitations of amisulpride with the aim of creating a product candidate with the potential for a differentiated therapeutic profile and strong intellectual property protection. We believe LB-102’s mechanism of action, data from our recently completed Phase 2 trial (NOVA-1) of LB-102 in acute schizophrenia, and the heritage of clinical and real-world experience with amisulpride support the continued development of LB-102 in both psychosis and mood disorders. We believe that LB-102, if approved, can become a mainstay of psychiatric practice by offering a potentially attractive alternative to branded and generic therapeutics for the treatment of schizophrenia, bipolar depression, adjunctive MDD and other neuropsychiatric diseases, given the compelling balance of clinical activity and tolerability observed to date.

Previous wording

The U.S. market for branded antipsychotic drugs was approximately $12 billion as of 2025. Antipsychotics that have expanded beyond schizophrenia into mood disorder indications have realized substantial increases in revenue. Despite the widespread use of generic antipsychotic drugs, several of these branded drugs each generate U.S. sales greater than $1 billion annually. Additionally, while available therapeutics to treat schizophrenia, bipolar depression, and MDD demonstrate clinical benefit, a significant unmet need remains for a treatment that delivers a more favorable risk–benefit profile by balancing tolerability with rapid onset and sustained, clinically meaningful efficacy with once-daily dosing. This includes addressing persistent residual symptoms—across both psychosis and mood disorders—that continue to impair functioning despite available therapies, underscoring the opportunity for improvement in the management of these conditions.

Current wording

The U.S. market for branded antipsychotic drugs was approximately $12 billion as of 2025. Antipsychotics that have expanded beyond schizophrenia into mood disorder indications have realized substantial increases in revenue. Despite the widespread use of generic antipsychotic drugs, several of these branded drugs each generate U.S. sales greater than $1 billion annually, with some approaching between $2 billion to $4 billion in annual U.S. sales. Additionally, while available therapeutics to treat schizophrenia, bipolar depression, MDD, and other neuropsychiatric diseases demonstrate clinical benefit, a significant unmet need remains for a treatment that delivers a more favorable risk–benefit profile by balancing tolerability with rapid onset and sustained, clinically meaningful efficacy with once-daily dosing. This includes addressing – across both psychosis and mood disorders – persistent residual symptoms such as anhedonia and cognitive impairment that continue to impact functioning despite available therapies, underscoring the opportunity for improvement in the management of these conditions.

Previous wording

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

Current wording

Since our inception in 2015, we have devoted substantially all of our resources to the research and development of LB-102 by conducting clinical trials and preclinical studies and recruiting management and technical staff to support these operations. To date, we have funded our operations primarily through the aggregate gross proceeds of approximately $549.5 million from the sales of our redeemable convertible preferred stock, common stock, convertible notes, the proceeds of our initial public offering (“IPO”) and proceeds from our private placement. On September 12, 2025, we closed the IPO and issued 21,850,000 shares of common stock at a price to the public of $15.00 per share, including 2,850,000 shares issued upon the exercise in full of the underwriters’ over-allotment option to purchase additional shares. We received gross proceeds of $327.8 million. Net proceeds were $302.3 million, after deducting underwriting commissions and other offering costs totaling $25.4 million. In February 2026, we received gross proceeds of approximately $100.0 million from our private placement. Net proceeds were approximately $93.7 million, after deducting financial advisory and other financing costs. In July 2026, we completed a private placement financing resulting in total gross proceeds of $150.0 million before deducting any transaction-related expenses.

Previous wording

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

Current wording

We have not generated any revenue from product sales and we have incurred recurring losses since our inception. Our net losses were $70.7 million and $10.2 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $200.2 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future. We anticipate that our operating expenses and capital expenditures will increase substantially with our ongoing activities, particularly as we:

Previous wording

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

Current wording

As of June 30, 2026, we had cash, cash equivalents and marketable securities of $327.8 million, which does not include net proceeds from our $150.0 million private placement in July 2026. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities, including net proceeds from our private placement, will be sufficient to meet our anticipated operating and capital expenditure requirements beyond the second quarter of 2029. See “Liquidity and Capital Resources” for further information.

Previous wording

formulation costs and chemistry, manufacturing and controls, or CMC, costs including formulation and active pharmaceutical ingredients, process development, analytical and quality infrastructure build-out, and validation support;

Current wording

formulation costs and chemistry, manufacturing and controls (“CMC”), costs including formulation and active pharmaceutical ingredients, process development, analytical and quality infrastructure build-out, and validation support;

Previous wording

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

Current wording

Research and development expenses were $44.1 million for the three months ended June 30, 2026, compared to $2.4 million for the three months ended June 30, 2025. The increase of $41.7 million was primarily due to: (i) a $32.1 million increase in clinical trial expenses primarily related to our Phase 3 trial of LB-102 in the treatment of patients with acute schizophrenia; (ii) a $2.7 million increase related to the conduct of our Phase 2 trial of LB-102 in the treatment of patients with bipolar depression; (iii) a $2.0 million increase in expenses related to the formulation and production of LB-102 for use in our active and planned clinical trials; (iv) a $4.0 million increase in personnel-related expenses primarily due to an increase in headcount, an increase in termination benefits, and an increase in stock compensation expense related to an option modification; and (v) a $1.3 million increase in preclinical and other direct expenses related to LB-102.

Previous wording

General and administrative expenses were $7.5 million for the three months ended March 31, 2026, compared to $3.0 million for the three months ended March 31, 2025. The increase of $4.5 million was primarily due to: (i) a $1.5 million increase in personnel-related expenses primarily due to an increase in headcount; (ii) a $1.6 million increase in stock-based compensation expense primarily related to stock options granted and repriced in connection with the IPO, as well as new hire grants, and (iii) a $1.4 million increase in professional fees, including accounting and legal fees and consulting fees partially related to costs associated with being a public company.

Current wording

General and administrative expenses were $9.8 million for the three months ended June 30, 2026, compared to $2.4 million for the three months ended June 30, 2025. The increase of $7.3 million was primarily due to: (i) a $2.8 million increase in stock-based compensation expense primarily related to stock options granted and repriced in connection with the IPO, new hire grants and an option modification; (ii) a $2.1 million increase in personnel-related expenses primarily due to an increase in headcount; (iii) a $0.9 million increase in professional fees, including accounting and legal fees partially related to costs associated with being a public company; (iv) a $1.0 million increase in consulting fees primarily related to strategy consulting; and (v) a $0.4 million increase in public company expenses including D&O insurance.

Previous wording

Non-operating income was $3.1 million for the three months ended March 31, 2026, compared to $1.1 million for the three months ended March 31, 2025. The increase of $1.9 million was primarily due to a $2.6 million increase in interest income as a result of higher cash balances in interest-bearing accounts in 2026, offset by a $0.6 million decrease in gain on change in fair value of derivative instruments compared to the same period from last year.

Current wording

Non-operating income was $5.4 million for the six months ended June 30, 2026, compared to $1.1 million for the six months ended June 30, 2025. The increase of $4.3 million was primarily due to a $5.4 million increase in interest income as a result of higher cash balances in interest-bearing accounts in 2026, partially offset by a $1.0 million decrease in gain on change in fair value of derivative instruments when compared to the prior year comparable period.

Previous wording

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

Current wording

As of June 30, 2026, we had $327.8 million of cash, cash equivalents and marketable securities. We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. Until required for use in our business, we typically invest our cash, in accordance with our investment policy, in money market funds and fixed income securities including U.S. treasury bills and government securities. We attempt to minimize credit risk related to our cash and cash equivalents and marketable securities by maintaining a well-diversified portfolio that limits the amount of exposure as to maturity and investment type.

Previous wording

In February 2026, we completed a private placement pursuant to which we issued and sold to certain investors an aggregate of (i) 3,306,571 shares of our common stock at a purchase price of $21.17 per share and (ii) pre-funded warrants to purchase 1,417,107 shares of our common stock at a purchase price of $21.1699 per pre-funded warrant, which represents the per share purchase price less the $0.0001 per share exercise price of each pre-funded warrant. The transaction closed on February 6, 2026 and resulted in aggregate gross proceeds of approximately $100.0 million, consisting of approximately $70.0 million from the sale of common stock and approximately $30.0 million from the sale of pre-funded warrants. Net proceeds were approximately $93.8 million, after deducting financial advisory fees and other financing costs of approximately $6.2 million. The pre-funded warrants are exercisable at any time for $0.0001 per share, have no expiration date, and are classified in permanent equity. In connection with the private placement, we entered into a registration rights agreement with the investors pursuant to which we filed a registration statement on Form S-1 (File No. 333-294900) on April 6, 2026, which was declared effective by the SEC on April 14, 2026.

Current wording

In February 2026, we completed a private placement pursuant to which we issued and sold to certain investors an aggregate of (i) 3,306,571 shares of our common stock at a purchase price of $21.17 per share and (ii) pre-funded warrants to purchase 1,417,107 shares of our common stock at a purchase price of $21.1699 per pre-funded warrant, which represents the per share purchase price less the $0.0001 per share exercise price of each pre-funded warrant. The transaction closed on February 6, 2026 and resulted in aggregate gross proceeds of approximately $100.0 million, consisting of approximately $70.0 million from the sale of common stock and approximately $30.0 million from the sale of pre-funded warrants. Net proceeds were approximately $93.7 million, after deducting financial advisory fees and other financing costs of approximately $6.3 million. The pre-funded warrants are exercisable at any time for $0.0001 per share, have no expiration date, and are classified in permanent equity. In connection with the private placement, we entered into a registration rights agreement with the investors pursuant to which we filed a registration statement on Form S-1 (File No. 333-294900) on April 6, 2026, which was declared effective by the SEC on April 14, 2026.

Previous wording

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

Current wording

The following table sets forth a summary of the net cash flow activity for the six months ended June 30, 2026 and 2025 (in thousands):

Previous wording

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

Current wording

Cash used in operating activities for the six months ended June 30, 2026 was $60.9 million, consisting of net loss of $70.7 million adjusted for non-cash items, including a $7.5 million charge for stock-based compensation expense, $0.5 million change in the fair value of the warrant liabilities, and $0.2 million in depreciation expense. Additionally, we had inflows of $1.5 million due to a change in our net operating assets and liabilities for the six months ended June 30, 2026, including a $16.0 million increase in accounts payable and accrued expense primarily related to timing of payments and clinical trial expenses, partially offset by a $14.3 million increase in prepaid expenses and other current assets primarily related to deposits made to our CRO for clinical trial expenses.

Previous wording

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

Current wording

Cash used in operating activities for the six months ended June 30, 2025 was $13.7 million, consisting of net loss of $10.2 million adjusted for non-cash items, including a gain on the change in fair value of the warrant liabilities of $0.6 million offset by a $1.0 million charge for stock-based compensation expense. Additionally, we had

Previous wording

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

Current wording

Cash provided by investing activities for the six months ended June 30, 2025 was $5.0 million primarily related to proceeds from the sale and maturities of marketable securities.

Previous wording

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

Current wording

Cash provided by financing activities for the six months ended June 30, 2026 was approximately $93.8 million primarily related to the net proceeds from the private placement in February 2026.

Previous wording

There were no financing activities for the three months ended March 31, 2025.

Current wording

There were no financing activities for the six months ended June 30, 2025.

Previous wording

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

Current wording

As of June 30, 2026, we had cash, cash equivalents and marketable securities of $327.8 million, which does not include net proceeds from our $150.0 million private placement in July 2026. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities, including net proceeds from our private placement in July 2026, will be sufficient to meet our anticipated operating and capital expenditure requirements beyond the second quarter of 2029.

Previous wording

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

Current wording

In May 2024, we entered into a new lease agreement for office space in New York, New York totaling approximately 8,900 square feet. The term of this lease commenced on June 21, 2024, which is the date we took control over the leased premises. The lease term continues through March 2032. In November 2025, we entered into an amendment to the lease agreement providing for the lease of approximately 4,600 square feet of additional office space. We determined the amendment for additional space should be treated as a separate lease and recorded a right-of-use asset of $1.4 million and corresponding lease liability of $1.8 million during the three months ended June 30, 2026. See Note 7 Leases to our unaudited condensed financial statements for more information regarding such leases.

Previous wording

We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Current wording

We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.