Equillium, Inc.

1. Organization and Significant Accounting Policies

Description of Business

Equillium, Inc., together with its wholly owned subsidiaries (the Company), was incorporated in the state of Delaware on March 16, 2017.

The Company is a clinical-stage biotechnology innovator with a mission to develop highly impactful therapies to treat severe autoimmune and inflammatory disorders. The Company's primary goal is to advance EQ504, its novel aryl hydrocarbon receptor modulator, into and through clinical development.

The Company is headquartered in La Jolla, California, and it manages its business asone operating segment.

Liquidity and Business Risks

As of June 30, 2026, the Company had $57.2 million in cash and cash equivalents. From inception through June 30, 2026, substantially all of the Company’s efforts have been focused on research, development and the advancement of the Company’s clinical and preclinical product candidates. The Company has not yet generated product sales and as a result has incurred significant operating losses and negative cash flows from operations. As a result, the Company has an accumulated deficit of $226.2 million as of June 30, 2026. The Company expects to incur additional losses in the future to conduct research and development for which it will need to raise additional capital to implement.

During the first quarter of 2026, the Company completed an equity financing with gross proceeds of approximately $35.0 million. Refer to Note 5 for additional information. Management believes that the Company's cash and cash equivalents as of June 30, 2026 will be sufficient to fund operations for at least the next 12 months from the date this Quarterly Report on Form 10-Q is filed with the Securities and Exchange Commission (SEC).

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and the rules and regulations of the SEC related to a quarterly report on Form 10-Q. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) promulgated by the Financial Accounting Standards Board (FASB). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The condensed consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the periods presented. All such adjustments are of a normal and recurring nature. The operating results presented in these condensed consolidated financial statements are not necessarily indicative of the results that may be expected for any future periods. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 25, 2026.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Foreign Currency Translation

The Company’s wholly-owned subsidiary in Australia uses its local currency as its functional currency. Assets and liabilities are translated into U.S. dollars at quarter-end exchange rates and revenues and expenses are translated at average exchange rates during the quarter and year-to-date periods. Foreign currency translation adjustments for the reported periods are included in accumulated other comprehensive income, net in the Company’s condensed consolidated statements of comprehensive loss, and the cumulative effect is included in the stockholders’ equity section of the Company’s condensed consolidated balance sheets.

Significant Accounting Policies

During the three and six months ended June 30, 2026, there were no changes to our significant accounting policies as described in Note 2 in the Company's Annual Report on Form 10-K filed with the SEC on March 25, 2026.

Accounting Pronouncements Pending Adoption

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to improve disclosures around an entity's expenses. Upon adoption, companies will be required to disclose in the notes to the financial statements a disaggregation of certain expense categories included within the expense captions on the face of the income statement. The standard is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted, and can be applied either prospectively or retrospectively. The Company plans to adopt the standard in its 2027 annual period and is currently assessing the impact this standard will have on the Company's consolidated financial statement disclosures.

No other new accounting pronouncements or legislation issued or effective as of June 30, 2026 have had, or are expected to have, a material impact on the Company’scondensed consolidated financial statements.

Net Loss per Share

Basic and diluted net loss per share is determined by dividing the net loss by the weighted-average number of common shares outstanding for the period. For all periods presented, the Company’s potentially dilutive securities include outstanding options under the Company’s 2018 Equity Incentive Plan, 2024 Inducement Plan and outstanding warrants to purchase common stock, each of which have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. Pre-funded warrants to purchase 48,515,298 shares of common stock are included in the computation of basic and diluted net loss per share for the three and six months ended June 30, 2026, as the pre-funded warrants are exercisable for nominal consideration. There were no pre-funded warrants to purchase common stock in the three and six months ended June 30, 2025. For all periods presented, there is no difference in the number of shares of common stock or common stock equivalents used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

2. Fair Value of Financial Instruments

The following tables summarize the Company’s assets that require fair value measurements on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):

(a)Money Market funds included in cash and cash equivalents in the condensed consolidated balance sheets, are valued at quoted market prices in active markets.

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, prepaid expenses and other current assets, accounts payable, and accrued liabilities, approximate fair value due to their short maturities.

The Company didnot hold any Level 1, 2 or 3 financial liabilities that are recorded at fair value on a recurring basis as of June 30, 2026 or December 31, 2025.

3. Supplemental Balance Sheet Details

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

4. Segment Reporting

The Company operates through asingle operating and reportable segment focused on the business of developing novel therapies to treat severe autoimmune and inflammatory disorders with the mission to develop life-changing therapeutics for patients. The Company manages all business activities on a consolidated basis. The Company’s chief operating decision maker (CODM) is the Chief Executive Officer.

The CODM evaluates the performance of the operating segment and allocates resources based on net loss that also is reported on the condensed consolidated statements of operations and comprehensive loss as net loss. The measure of the operating segment assets is reported on the condensed consolidated balance sheets as total assets.

The CODM uses net loss to monitor budget versus actual results and to analyze cash flows in assessing performance of the segment and allocating resources. The significant 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 our condensed consolidated statements of operations and comprehensive loss.

5. Stockholders’ Equity

Authorized Shares

On May 28, 2026, the Company's stockholders approved an amendment to the Company's Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 200,000,000 shares to 400,000,000 shares.

March 2026 Purchase Agreement

On March 11, 2026, the Company entered into a Securities Purchase Agreement (the March 2026 Purchase Agreement) with an institutional and accredited investor (the March Investor). At the closing on March 13, 2026, the Company issued and sold 1,179,508 shares of the Company’s common stock for a purchase price of $1.854 per share and a pre-funded warrant to purchase up to 17,698,593 shares of common stock at a purchase price of $1.8539 per pre-funded warrant, with an exercise price of $0.0001 per warrant share, in each case to the March Investor for gross proceeds of approximately $35.0 million. Net proceeds from the March 2026 Private Placement were $34.8 million, after deducting offering expenses of $0.2 million.

The pre-funded warrant has an exercise price of $0.0001 per warrant share, subject to customary adjustments, and is exercisable at any time and will not expire until exercised in full. The pre-funded warrant will also be exercisable on a net exercise “cashless”

basis. The pre-funded warrant maynot be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof immediately following such exercise would exceed a specified beneficial ownership limitation, not to exceed 19.99%.

In connection with the issuance and sale of the shares and pre-funded warrant, the Company granted the March Investor customary registration rights pursuant to the Registration Rights Agreement dated March 13, 2026. On April 7, 2026, the Company filed a registration statement on Form S-3 (File No. 333-294919) for the resale for both the common stock and the shares of common stock issuable upon the exercise of the pre-funded warrant that was issued at the closing, and it was declared effective on April 16, 2026.

The Company assessed the pre-funded warrant issued for the purchase of up to 17,698,593 shares of common stock and determined that it doesnot require liability classification pursuant to ASC 480. The pre-funded warrant does not have any net cash settlement provisions that would preclude equity classification under ASC 815-40. Accordingly, the pre-funded warrant was recorded to additional paid-in capital in the condensed consolidated balance sheet. As of June 30, 2026 and through the date of the filing of this Quarterly Report on Form 10-Q, the pre-funded warrant has not been exercised.

August 2025 Purchase Agreement

On August 10, 2025, the Company entered into a Securities Purchase Agreement (the August 2025 Purchase Agreement) with certain institutional and accredited investors (the Investors), pursuant to which the Company agreed to sell and issue shares (Shares) of the Company’s common stock and pre-funded warrants to purchase shares of common stock (Warrant Shares), in up to two closings in a private placement transaction (the August 2025 Private Placement).

The initial closing of the Private Placement occurred on August 12, 2025, (the Initial Closing). At the Initial Closing, the Company issued and sold 21,814,874 Shares at a purchase price of $0.57 per share (the Share Price) and pre-funded warrants to purchase up to 30,816,705 Warrant Shares at a purchase price of $0.5699 per Warrant Share (the Warrant Price) to the Investors for gross proceeds to the Company of approximately $30.0 million. Net proceeds from the August 2025 Private Placement were $27.9 million, after deducting placement agent fees and offering expenses totaling $2.1 million.

Pursuant to the August 2025 Purchase Agreement, subject to the occurrence of the Milestone Closing Trigger (defined below), the Investors have agreed to purchase at a closing (the Milestone Closing) up to 35,087,717 Shares or pre-funded warrants in lieu thereof at a purchase price per Share and pre-funded warrant equal to the Share Price and the Warrant Price, respectively, for gross proceeds to the Company of up to approximately $20.0 million. The Milestone Closing trigger means: (A) the achievement of either of the following prior to the five-year anniversary of the date of the Purchase Agreement (i) the clearance of an investigational new drug application for EQ504 or (ii) the dosing of the first patient in a single ascending dose or a multiple ascending dose trial of EQ504 in Australia or New Zealand (the first such event to occur, the Milestone Event), and (B) (x) the achievement of a volume weighted average price per share of $2.50 (subject to appropriate, proportional adjustment for any stock splits or combinations of the common stock occurring after the date of the Purchase Agreement) measured during any 10 consecutive trading days during the 30 trading days following the date the Company first announces via a press release or Current Report on Form 8-K the occurrence of the Milestone Event (such period the Measurement Period and such price threshold requirement, the Price Threshold), or (y) the Company’s receipt of a waiver of the Price Threshold signed by the Investors who hold a majority of the securities issued in the Private Placement (determined as if all of the Warrant Shares underlying pre-funded warrants then outstanding have been issued without regard to any limitations on the exercise of such pre-funded warrants) and delivered to the Company during the Measurement Period (the achievement or occurrence of (A) and (B) are collectively, the Milestone Closing Trigger). In the event the Milestone Closing Trigger occurs as a result of a Price Threshold Waiver, only the waiving Investors will be obligated to purchase Shares or pre-funded warrants at the Milestone Closing.

The pre-funded warrants have an exercise price of $0.0001 per Warrant Share, subject to customary adjustments, and are exercisable at any time and will not expire until exercised in full. The pre-funded warrants will also be exercisable on a net exercise “cashless” basis. The pre-funded warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof immediately following such exercise would exceed a specified beneficial ownership limitation, not to exceed 19.99%.

In connection with the issuance and sale of the shares and pre-funded warrants, the Company granted the Investors customary registration rights pursuant to the Registration Rights Agreement dated August 12, 2025. On September 9, 2025, the Company filed a registration statement on Form S-3 (File No. 333-290138) for the resale of the Shares as well as the Warrant Shares that were issued at the Initial Closing, and it was declared effective on September 18, 2025.

The Company assessed the 30,816,705 pre-funded warrants issued at the Initial Closing and the 35,087,717 Shares or pre-funded warrants in lieu thereof to be issued at the Milestone Closing subject to the occurrence of the Milestone Closing Trigger and determined that they donot require liability classification pursuant to ASC 480. The pre-funded warrants at the Initial Closing and the Shares or pre-funded warrants contingent to be issued at the Milestone Closing do not have any net cash settlement provisions that would preclude equity classification under ASC 815-40. Accordingly, the pre-funded warrants were recorded to additional paid-in capital in the consolidated balance sheet. As of June 30, 2026 and through the date of the filing of this Quarterly Report on Form 10-Q, the pre-funded warrants issued at the Initial Closing have not been exercised.

2023 ATM Facility

In October 2023, the Company entered into an at-the-market facility with Jefferies LLC (Jefferies) under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $21.95 million from time to time through Jefferies acting as the Company's sales agent (the 2023 ATM Facility). On August 3, 2025, the Company entered into Amendment No. 1 to the 2023 ATM Facility pursuant to which Jefferies was replaced by LifeSci Capital LLC as the sales agent under the 2023 ATM Facility. On September 19, 2025, the Company filed a prospectus supplement with the SEC under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $75.0 million, pursuant to the 2023 ATM Facility, as amended.

There wereno sales under the 2023 ATM Facility for the three and six months ended June 30, 2026. During the three months ended June 30, 2025, there wereno sales under the 2023 ATM Facility. During the six months ended June 30, 2025, the Company sold an aggregate of 109,410 shares of common stock under the 2023 ATM Facility for gross proceeds of approximately $55,000. Issuance costs related to the 2023 ATM Facility totaled $0.5 million through June 30, 2025.

Since June 30, 2026 and through the date of the filing of this Quarterly Report on Form 10-Q, there have beenno sales of the Company's stock under the 2023 ATM Facility. The Company has $75.0 million available to sell under the 2023 ATM Facility.

Stock Options

The following table summarizes stock option activity during the six months ended June 30, 2026:

(a)

Aggregate intrinsic value in this table was calculated as the positive difference, if any, between the closing price per share of the Company’s common stock on June 30, 2026 of $3.20 and the exercise price of the underlying options.

At June 30, 2026, unamortized stock-based compensation expense for stock options was $13.9 million, with a weighted-average recognition period of 3.21 years.

Stock-Based Compensation Expense

The non-cash stock-based compensation expense for all stock awards, net of forfeitures recognized as they occur, that was recognized in the condensed consolidated statements of operations is as follows (in thousands):

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance is as follows: