Quince Therapeutics, Inc.

NOTES TO CONDENSED CONS OLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Organization

Description of Business

Quince Therapeutics, Inc. ("Quince" or the "Company") is a clinical-stage biopharmaceutical company developing a novel disease modifying therapeutic to address the significant unmet medical need associated with pulmonary disorders with few, if any, treatment options available.

Prior to the Orphai Acquisition (defined below), the Company was focused on developing its proprietary Autologous Intracellular Drug Encapsulation (“AIDE”) technology for the treatment of Ataxia-Telangiectasia (“A-T”) through its encapsulated dexamethasone sodium phosphate encapsulated in patient's own red blood cells (“eDSP”) product candidate. In January 2026, the Company completed its pivotal Phase 3 NEAT clinical trial of eDSP for the treatment of A-T. The primary endpoints of the NEAT trial did not reach statistical significance. Based on the results of the NEAT trial, the Company determined that it would no longer continue development of eDSP in this or other therapeutic indications, and is currently considering next steps for the eDSP program and other assets.

Orphai Acquisition

On May 18, 2026, the Company completed the Acquisition of Orphai (the "Orphai Acquisition"), in accordance with the terms of the Agreement and Plan of Merger, dated May 17, 2026 (the “Merger Agreement”). In connection with the Orphai Acquisition, the Company acquired Orphai’s lead asset, LAM-001, a proprietary investigational inhaled dry powder formulation of rapamycin whose differentiated characteristics may permit treatment of conditions associated with dysfunctional mammalian target of rapamycin (“mTOR”) activity that cannot be adequately treated using a systemically delivered formulation, including oral solution or tablets. Following the Orphai Acquisition, the Company’s lead product candidate is LAM-001. See Note 3 for further details.

Liquidity and Capital Resources

The Company has incurred losses and negative cash flows from operations since inception and expects to continue to generate operating losses for the foreseeable future. As of June 30, 2026, the Company had an accumulated deficit of$500.0 million. Since inception through June 30, 2026, the Company has funded operations primarily with the net proceeds from the sale of its securities, from the net proceeds from the Company’s initial public offering (the “IPO”) and from the net proceeds of private investments in public equity transactions (collectively known as “PIPE Financings”), including the concurrent private placement in May 2026 described below. As of June 30, 2026, the Company had cash and cash equivalents of$116.0 million.

The Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued.

Concurrent with the Orphai Acquisition, in May 2026, the Company completed a private placement financing of the Company’s Series C Non-Voting Convertible Preferred Stock (the “Series C Preferred Stock”) and warrants to purchase shares of Series C Preferred Stock, providing$115.0 million in gross upfront proceeds, with the potential to receive up to an additional$72.0 million in gross proceeds upon the exercise of the warrants (with an additional up to$11.0 million in gross proceeds available upon the exercise of warrants issued to former Orphai stockholders). The Series C 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, subject to certain beneficial ownership limitations. The Certificate of Designation of Preferences, Rights and Limitations of the Series C 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 C 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. As a result, the Company concluded that the proceeds received from the private placement financing cannot be relied upon to mitigate conditions that raise substantial doubt because the availability of those proceeds is subject to conditions that are not entirely within the Company’s control. The conversion of the Series C Preferred Stock into common stock and therefore removal of the requirement to make cash payment based on the value of the undelivered shares is subject to a vote of the Company's stockholders.

The Company’s ability to satisfy the potential cash settlement obligations associated with the Series C Preferred Stock 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. Factoring in these potential cash payments, based on its current operating plan, the Company believes that its cash and cash equivalents balance will not be sufficient to fund operations and capital expenditures for at least the twelve months following the issuance of these unaudited condensed consolidated financial statements. Accordingly, the Company concluded that substantial doubt about the Company’s ability to continue as a going concern continues to exist within one year after the date these financial statements are available to be issued.

The accompanying unaudited condensed consolidated financial statements 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 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.

Note 2. Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Quince Therapeutics, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and the notes thereto have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions of the SEC on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair statement of the results of operations and cash flows for the periods presented have been included.

The condensed consolidated balance sheet as of June 30, 2026, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2026 and 2025, the condensed consolidated statements of Series C Preferred Stock and stockholders’ equity (deficit) for the three and six months ended June 30, 2026 and 2025, the condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025, and the financial data and other financial information disclosed in the notes to the condensed consolidated financial statements are unaudited. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2025 included in the Company’s Form 10-K filed with the SEC on April 10, 2026. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any other future annual or interim period.

Reverse Stock Splits

On June 29, 2026, the Company effected a 1-for-20 reverse stock split of its outstanding common stock (the “June 2026 Reverse Stock Split”). The June 2026 Reverse Stock Split became effective as of 11:59 p.m., Eastern Time, on June 29, 2026 and the Company’s common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on June 30, 2026. The June 2026

Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock.

On April 10, 2026, the Company effected a 1-for-10 reverse stock split of its outstanding common stock (the “April 2026 Reverse Stock Split”). The April 2026 Reverse Stock Split became effective as of 11:59 p.m., Eastern Time, on April 10, 2026 and the Company’s common stock began trading on the Nasdaq Stock Market on a split-adjusted basis on April 13, 2026. The April 2026 Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock.

All share and per share information has been retroactively adjusted to reflect the April and June 2026 Reverse Stock Splits (collectively, the "Reverse Stock Splits") for all periods presented in this report.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses, as well as related disclosure of contingent assets and liabilities. The most significant estimates used in the Company’s condensed consolidated financial statements relate to the determination of the fair value of identifiable assets and liabilities in connection with business combinations including associated intangible assets, the fair value of contingent consideration, warrant liabilities and debt, accruals for research and development costs, useful lives of long-lived assets, stock-based compensation and related assumptions, the incremental borrowing rate for leases and income tax uncertainties, including a valuation allowance for deferred tax assets, impairment of intangible assets; and contingencies. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from the Company’s estimates.

Foreign Currency Translation and Transactions

The functional currency of the Company’s wholly-owned international subsidiaries is the Euro. Prior to the dissolution of the Company's Australian subsidiary, the functional currency of that subsidiary was the Australian Dollar. The Company's financial results and financial position are translated into U.S. dollars using exchange rates at balance sheet dates for assets and liabilities and using average exchange rates for income and expenses. The resulting translation differences are presented as a separate component of accumulated other comprehensive loss, as a separate component of equity.

Foreign currency transactions are translated into the functional currencies using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses, resulting from the settlement of such transactions and from the re-measurement of monetary assets and liabilities denominated in foreign currencies using exchange rates at balance sheet date and non-monetary assets and liabilities using historical exchange rates, are recognized in the condensed consolidated statements of operations and comprehensive loss.

Segment Information

The Company manages its business activities on a consolidated basis and operates asone operating and reportable segment, for the purposes of assessing performance and making operating decisions.

Operating segments are defined as components of an enterprise for which discrete financial information is available and is evaluated regularly by the Chief Operating Decision Maker ("CODM"), in deciding how to allocate resources and assess performance.

The Company’s Chief Executive Officer, who is the CODM, reviews financial information on a consolidated basis for purposes of allocating and evaluating financial performance. The CODM evaluates the Company’s performance and resource allocation by analyzing consolidated financial information. See Note 16 for further details.

Business Combination and Asset Acquisitions

The Company evaluates whether an acquisition should be accounted for as a business combination or an asset acquisition under ASC 805, Business Combinations, based on whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. Transactions that do not meet the definition of a business are accounted for as asset acquisitions.

The Company also evaluates whether the acquired entity is a variable interest entity ("VIE") under ASC 810, Consolidation. If the acquired entity is a VIE, the primary beneficiary is identified as the accounting acquirer.

Replacement Awards

When the Company assumes and replaces outstanding stock options of an acquired entity, the fair value of the replacement awards is measured as of the acquisition date using the Black-Scholes option-pricing model. The portion of the fair value attributable to pre-combination service is included in consideration, and the portion attributable to post-combination service is recognized as future compensation expense.

Preferred Stock

The Company assesses its preferred stock to determine whether it should be classified as a liability, mezzanine equity, or permanent equity. This assessment first considers whether the preferred stock meets the definition of a mandatorily redeemable financial instrument or is otherwise required to be classified as a liability under ASC 480, Distinguishing Liabilities from Equity. This includes an evaluation of any provisions labeled as a redemption feature, call option, or conversion option to determine whether the underlying redemption or settlement terms in substance require the Company to redeem the shares.

For preferred stock that is not classified as a liability under ASC 480, the Company assesses whether the preferred stock should be classified as mezzanine equity or permanent equity. This assessment considers whether the preferred stock is redeemable (i) at a fixed or determinable price on a fixed or determinable date, (ii) at the option of the holder, or (iii) upon the occurrence of an event that is not solely within the Company's control. The Company also considers whether the preferred stock contains liquidation provisions, including fundamental transaction or deemed liquidation provisions, that carry the general characteristics of a redemption feature. Preferred stock that meets any of these conditions is classified as mezzanine equity and presented outside of permanent equity on the Company's condensed consolidated balance sheets. At all other times, the Company classifies its preferred stock in stockholders’ equity (deficit).

If the preferred stock is classified as mezzanine equity, the Company further evaluates whether the preferred stock is currently redeemable or probable of becoming redeemable to determine whether the carrying value should be remeasured to its redemption value as of each balance sheet date.

Intangible Assets

Definite lived Intangible Assets

Intangible assets with a definite useful life are amortized on a straight-line basis over the estimated useful life of the related assets. The Company regularly reviews whether current conditions or events suggest that the carrying values of its acquired definite lived intangible assets might not be recoverable. When such conditions are identified, an estimate of the undiscounted future cash flows from these assets, or relevant asset groupings, is compared to their carrying value to determine if an impairment exists. If an impairment is identified, the loss is calculated as the difference between the carrying value of the intangible asset and its fair value, which is based on the net present value of the estimated future cash flows.

Indefinite lived Intangible Assets

Intangible assets with an indefinite useful life are not amortized. Intangible assets acquired in a business combination or an acquisition that are used in research and development activities (regardless of whether they have an alternative future use) shall be considered indefinite lived until the completion or abandonment of the associated research and development efforts. Intangible assets acquired in an asset acquisition with no alternative future use are allocated a portion of the consideration transferred and charged to expenses at the acquisition date. Intangible assets acquired in a business combination are initially recorded at fair value. During the period that those assets are considered indefinite lived, they shall not be amortized but shall be tested for impairment. Once the research and development efforts are completed or abandoned, the entity shall determine the useful life of the assets. An indefinite lived intangible asset shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount. If that is the case, the Company performs a quantitative impairment test, and, if the carrying amount of the Company exceeds its fair value, then the Company will recognize an impairment charge for the amount by which its carrying amount exceeds its fair value, not to exceed the carrying amount of the intangible asset. Qualitative factors to be considered include but are not limited to:

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Cost factors such as increases in raw materials, labor, or other costs that have a negative effect on future expected earnings and cash flows

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Legal/regulatory factors or progress and results of clinical trials

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Other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset

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Industry and market considerations such as a deterioration in the environment in which an entity operates, or a more competitive environment

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Macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset.

As a result of the clinical readout of the Phase 3 NEAT study in January 2026, which led the Company to discontinue development of its encapsulated dexamethasone sodium phosphate encapsulated in patient's own red blood cells (“eDSP") product candidate, the research and development associated with the in-process research and development ("IPR&D") was abandoned and an impairment charge recorded to reduce the carrying value to zero.

Intangible assets acquired in an asset acquisition that are used in research and development activities (regardless of whether they have an alternative future use) shall be considered indefinite lived until the completion or abandonment of the associated research and development efforts.

The Company determines the fair value of contingent consideration related to the Company's acquisition of EryDel in October 2023 using a probability-weighted discounted cash flow method, with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC Topic 820, Fair Value Measurement. The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future cash flows, during the contingent consideration period, appropriately discounted considering the uncertainties associated with the earnout obligation, and calculated in accordance with the terms of the definitive agreement. The liability for the contingent consideration were initially established at the time of the acquisition and are evaluated on a quarterly basis based on additional information as it becomes available. Any change in the fair value adjustment is recorded in the earnings of that period. Changes in the fair value of the contingent consideration obligations may result from changes in probability assumptions with respect to the likelihood of achieving the various contingent payment obligations. Significant increases or decreases in the inputs noted above in isolation would result in a significantly lower or higher fair value measurement. As a result of the clinical readout of the Phase 3 NEAT study in January 2026, which led the Company to discontinue development of eDSP, the criteria for the contingent consideration payments will not be met, resulting in the related liability being reduced to zero.

Cash, Cash Equivalents and Investments

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash equivalents include marketable securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase and at the end of each reporting period. Investments with maturities beyond three months at the date of purchase and which mature at, or less than twelve months from the balance sheet date are classified as short-term investments. Collectively, cash equivalents and short-term investments are considered available-for-sale and are recorded at fair value. Unrealized gains and losses are recorded as a component of other comprehensive loss in the consolidated statements of operations and included as a separate component of consolidated statements of stockholders’ equity. Realized gains and losses are included in interest income in the condensed consolidated statements of operations and comprehensive loss.

Premiums (discounts) are amortized (accreted) over the life of the related investment as an adjustment to yield using the straight-line interest method. Dividend and interest income are recognized when earned. These amounts are recorded in “interest income” in the condensed consolidated statements of operations and comprehensive loss.

Warrants

The Company accounts for warrants as equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms. The assessment considers whether the warrants are freestanding financial instruments, meet the definition of a liability, and whether the warrants meet all of the requirements for equity classification, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For warrants that meet all criteria for equity classification, the warrants are recorded as a component of additional paid-in capital in the condensed consolidated balance sheets at the time of issuance. For warrants that do not meet all the criteria for equity classification, the warrants are recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized within the condensed consolidated statements of operations. The fair value of the warrants is estimated using the Black-Scholes option pricing model (see Note 11).

Reserve for Italian Research and Development Tax Credit

The Company maintains a reserve for Italian research and development tax credits to reflect estimated loss of utilization due to the wind-down of the business. This estimate is based on historical utilization and management’s judgment regarding forecasted utilization. Adjustments are recorded in research and development operating expense in the period they become known.

Recently Adopted Accounting Pronouncements

There were no new accounting standards adopted during the three and six months ended June 30, 2026.

Recent Accounting Pronouncements Not Yet Adopted

The following are new accounting pronouncements that the Company is evaluating for future impacts on its financial statements:

ASU 2024-03, Disaggregation of Income Statement Expenses (“DISE”). In November 2024, the FASB issued a new accounting standard to improve the disclosures about an entity’s expenses and address requests from investors for more detailed information about the types of expenses included in commonly presented expense captions. The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with retrospective application permitted. The Company is evaluating the disclosure requirements related to the new standard.

ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. In December 2025, the FASB issued a new accounting standard to clarify the applicability of interim reporting guidance under GAAP, provide a comprehensive list of interim disclosure requirements within Topic 270, and introduce a disclosure principle requiring entities to provide information about events and changes occurring after the end of the most recent annual reporting period that have a material impact on the entity. The ASU does not change the fundamental nature of interim reporting or expand or reduce existing interim disclosure requirements. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 for public business entities, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its interim financial reporting and related disclosures.

All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.

Note 3. Asset Acquisition

Acquisition of Orphai Therapeutics

On May 18, 2026, the Company acquired Orphai pursuant to that certain Agreement and Plan of Merger, dated May 17, 2026 (the "Merger Agreement"). Under the terms of the Merger Agreement, following closing of the Orphai Acquisition, the Company issued to holders of Orphai, an aggregate of (i)162,971 shares of the Company’s common stock and (ii)67,101.235 shares of Series C Preferred Stock, each share of which is convertible into 52 shares of common stock, as adjusted for the June 2026 Reverse Stock Split, subject to certain conditions.

Under the terms of the Merger Agreement, options to purchase Orphai common stock were assumed by the Company and were converted into options to purchase an aggregate of 1,308,804 shares of common stock, which options are subject to exercise restrictions prior to obtaining approval during a special meeting of stockholders. In addition, the Company issued to holders of Orphai warrants (the "Acquisition Warrants") to purchase an aggregate of 10,964.505 shares of Series C Preferred Stock (or 570,169 shares on an as-converted-to-common basis, and without giving effect to any beneficial ownership limitations), at an exercise price of$996.90 per share of Series C Preferred Stock (or$19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split).

On May 18, 2026, concurrent with the Orphai Acquisition, the Company entered into a securities purchase agreement (the "May 2026 Securities Purchase Agreement") for a private placement financing with new and returning investors to raise up to$187.0 million in gross proceeds, which includes$115.0 million in upfront proceeds and up to an additional approximately$72.0 million upon exercise of accompanying warrants, in which the investors were issued approximately 144,200.633 shares of Series C Preferred Stock (convertible into an aggregate of 7,498,447 shares of common stock, without giving effect to any beneficial ownership limitations) at a price of$797.50 per share, and accompanying warrants (the "Financing Warrants") to purchase up to 72,100.322 shares of Series C Preferred Stock (or 3,749,231 shares, on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations) at an exercise price of$996.90 per share (or$19.17 per share on an as-converted-to-common basis)

(the "May 2026 Financing"). For additional information relating to the May 2026 Financing, see Notes 4, 9, 10, and 11 to these unaudited condensed consolidated financial statements.

The Orphai Acquisition was accounted for as an asset acquisition as Orphai did not meet the definition of a business under ASC Topic 805, Business Combinations (“ASC 805”) as substantially all of its value was in the IPR&D asset. Accordingly, the acquired net assets and assumed net liabilities of Orphai are recorded as of the Orphai Acquisition closing date at their fair value. The Company was determined to be the accounting acquirer based upon the terms of the Orphai Acquisition. Orphai was determined to be a variable interest entity (“VIE”) as it was insufficiently capitalized to fund future operations, where the Company is the primary beneficiary. As such, the acquisition costs of $2.1 million were expensed and not capitalized as part of the purchase price in accordance with ASC 805. In addition, the excess of the consideration transferred, and the fair value of the net asset acquired, IPR&D, and net liabilities assumed were recorded as an asset acquisition loss and included in the gain on Orphai Acquisition line item in the condensed consolidated statements of operations and comprehensive loss.

The following table summarizes the estimated fair value of the consideration transferred of $56.9 million (in thousands):

(a)

The fair value of consideration transferred was based on 162,971 shares of Common Stock issued multiplied by the closing price of Quince common stock on the acquisition date of May 18, 2026.

(b)

The fair value of 67,101.235 shares of Series C Preferred Stock was based on the fair value of the Series C Preferred Stock issued in the May 2026 Financing. For additional information, see Note 9 to these unaudited condensed consolidated financial statements.

(c)

The fair value of the warrants issued was determined utilizing the Black-Scholes-Merton option pricing model. Quince issued 10,964.505 warrants of Series C Preferred Stock. For additional information, see Note 11 to these unaudited condensed consolidated financial statements.

(d)

Each outstanding and unexercised option award to purchase shares of Orphai common stock was converted into an option award in respect of a number of shares of common stock of the Company. The calculation of consideration transferred includes the portion of the fair-value-based measure of the acquiree awards that relates to the pre-combination service period. The excess value of the replacement Quince awards as well as the fair-value-based measure of the acquiree award related to the post combination service period will be recorded as post combination compensation cost over the remaining service term.

The following table summarizes the allocation of the estimated fair value of the consideration transferred to the net assets acquired and liabilities assumed, with the excess recorded to gain on acquisition (in thousands):

(e)

IPR&D represents the research and development projects of Orphai which were in-process, but not yet completed, and which the Company plans to advance. The fair value of IPR&D projects acquired in an asset acquisition with no alternative future use are allocated a portion of the consideration transferred and charged to expenses at the acquisition date.

Note 4. Fair Value Measurements

The fair value of the Company's financial instruments reflects the amounts that the Company estimates that it would receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The Company discloses and recognizes the fair value of the assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:

Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly, including inputs in markets that are not considered to be active.

Level 3 - Inputs that are unobservable. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There wereno transfers within the hierarchy during thesix months ended June 30, 2026 and year ended December 31, 2025.

The Company had elected the fair value option for the EIB Loan guaranteed by the Company in connection with the EryDel Acquisition. The Company had adjusted the EIB Loan to fair value through the change in fair value of debt in the accompanying condensed consolidated statements of operations and comprehensive loss. Subsequent unrealized gains and losses on items for which the fair value option is elected were reported in earnings. The Company will break out any change in value due to credit loss in accumulated other comprehensive loss. For the three and six months ended June 30, 2026 and year ended December 31, 2025, there was no change in value due to credit loss.

Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of June 30, 2026 and December 31, 2025 are presented in the following tables (in thousands):

The Company classifies government and agency notes as Level 2 investments as the Company uses quoted prices for similar assets sourced from certain third-party pricing services. The third-party pricing services generally utilize industry standard valuation models for which all significant inputs are observable, either directly or indirectly, to estimate the price or fair value of the securities. The primary input generally includes reported trades or quotes on the same or similar securities. The Company does not make additional judgments or assumptions made to the pricing data sourced from the third-party pricing services.

Level 3 Assets and Liabilities

The following table reflects the changes in present value of acquisition related accrued earnouts of contingent consideration liability using significant unobservable inputs (Level 3) for thesix months ended June 30, 2026 and 2025 (in thousands):

The contingent consideration arrangement required the Company to pay up to $485.0 million of additional consideration in cash, comprised of up to $5.0 million upon the enrollment of the first patient in the Phase 3 NEAT clinical trial, which was paid in 2024, $25.0 million at NDA acceptance, up to $60.0 million upon the achievement of specified approval milestones, and up to $395.0 million upon the achievement of specified on market and sales milestones. As a result of the clinical readout of the Phase 3 NEAT study in January 2026, which led the Company to discontinue development of eDSP, the criteria for the contingent consideration payments will not be met, resulting in the related liability being reduced to zero during the six months ended June 30, 2026.

To estimate the fair value of the contingent consideration, the Company used a probability-weighted discounted cash flow model with an expected present value valuation technique with significant unobservable fair value inputs and is therefore classified as a Level 3 measurement. The estimates of fair value are uncertain and changes in the estimated inputs may result in significant adjustments to the fair value. The unobservable inputs consisted of the expected timing of milestone completion dates, probability of achievement, and discount rate. The change in the fair value of the contingent consideration during the six months ended June 30, 2025 is primarily due to the expected timing of achieving various milestones, and the passage of time related to the contingent consideration earnout resulting from the EryDel Acquisition.

The following table summarizes the assumptions used in the valuation of the contingent consideration in the period presented:

Debt

The following table presents the changes in the fair value of the Level 3 EIB Loan for thesix months ended June 30, 2026 and 2025 (in thousands):

To estimate the fair value of the EIB Loan, the Company used an expected present value valuation technique with significant unobservable inputs resulting in classification as a Level 3 measurement. The estimate of fair value is uncertain and changes in the estimated inputs may result in significant adjustments to the fair value. The unobservable inputs consisted of discount rate which includes the credit quality of the Company and credit spreads for comparable debt.

The following table summarizes the assumptions including the unobservable inputs related to the Company's debt in the periods presented:

Acquisition and Financing Warrants

In connection with the Orphai Acquisition, the Company issued to holders of Orphai warrants the Acquisition Warrants to purchase 10,964.505 shares of Series C Preferred Stock (or 570,169 shares on an as-converted-to-common basis, and without giving effect to any beneficial ownership limitations), at an exercise price of$996.90 per share of Series C Preferred Stock (or$19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split).

Concurrent with the May 2026 Securities Purchase Agreement, the Company issued the Financing Warrants to purchase up to 72,100.322 shares of Series C Preferred Stock (or 3,749,231 shares, on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations) at an exercise price of$996.90 per share (or$19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). Each Financing Warrant will be exercisable beginning on the trading day following the earlier of the Company’s public announcement of (a) top line data from the ongoing LAM-001 Phase 2 trial in Bronchiolitis Obliterans Syndrome (the “LAM-001 Trial”) and (b) the termination or suspension of the LAM-001 Trial and through the 30 th day following such public announcement and will be exercisable at a price equal to$996.90 per share of Series C Preferred Stock (or$19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split) for up to an additional approximately$72.0 million in additional proceeds if exercised in full (with an additional up to$11.0 million in gross proceeds available upon the exercise of warrants issued to former Orphai stockholders).

The Acquisition and Financing Warrants will become exercisable for common stock following the Company’s receipt of stockholder approval for the conversion of the Series C Preferred Stock issued in the Orphai Acquisition in accordance with Nasdaq Listing Rules, among other related acquisition matters, subject to certain beneficial ownership limitations.

The Acquisition and Financing Warrants are classified as liabilities on the Company's condensed consolidated balance sheet based on an assessment of the warrants' specific terms and applicable authoritative guidance in ASC 480. See Note 11 for further details. The warrant liability is initially measured at fair value upon issuance and is subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in the condensed consolidated statements of operations.

The Company estimates the fair value of warrants utilizing the Black-Scholes option pricing model, which is dependent upon several Level 3 inputs that are not observable in active markets, including the expected term, volatility, risk-free interest rate, and expected dividends. Each of these inputs is subjective and generally requires significant judgment to determine.

The following table summarizes key inputs used in the valuation of the liability classified Acquisition and Financing Warrants as of the periods presented:

The following table presents the changes in the fair value of the Level 3 liability classified Acquisition and Financing Warrants for thesix months ended June 30, 2026:

June 2025 Warrants

During the year ended December 31, 2025, in connection with the June 2025 Private Placement (as defined below), the Company issued common and pre-funded warrants (the "June 2025 Warrants") which are classified as liabilities based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 815. See Note 11 for further details. The Company estimated the fair value of the common and pre-funded warrants utilizing the Black-Scholes option pricing model, which was dependent upon several Level 3 inputs that are not observable in active markets, such as expected term, volatility, risk-free interest rate, and expected dividends. Each of these inputs is subjective and generally requires judgment to determine. In January 2026, all 10,000 shares of the pre-funded warrants were exercised through a cashless exercise into 9,989 shares of the Company's common stock. In May 2026, the common warrants were terminated as a result of the Orphai Acquisition.

The following table summarizes key inputs used in the valuation of the liability classified June 2025 Warrants as of the period presented:

The following table presents the changes in the fair value of the Level 3 liability classified June 2025 Warrants for thesix months ended June 30, 2026:

Note 5. Cash, Cash Equivalents and Investments

The following tables categorize the fair values of cash, cash equivalents and investments measured at fair value on a recurring basis on the condensed consolidated balance sheets (in thousands):

The Company's investments are classified as available-for-sale securities. As of June 30, 2026, there wereno available-for-sale securities outstanding. There wereno significant realized gains or losses recognized on the sale or maturity of available-for-sale securities for thethree and six months ended June 30, 2026 and 2025, and as a result, the Company didnot reclassify any significant amounts out of accumulated other comprehensive loss. No other-than-temporary impairments on these securities were recognized for thethree and six months ended June 30, 2026 and 2025.

The Company periodically assesses its investment in available-for-sale securities for impairment losses and credit losses. The amount of credit losses is determined by comparing the difference between the present value of future cash flows expected to be collected on these securities and the amortized cost. Factors considered in assessing credit losses include the position in the capital structure, vintage and amount of collateral, delinquency rates, current credit support, and geographic concentration. There have beenno impairments or credit losses related to available-for-sale securities for thethree and six months ended June 30, 2026 and 2025.

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value and recognized in interest and other income, net in the statement of operations and comprehensive loss. If neither criteria is met, the Company evaluates whether the decline in fair value is related to credit-related factors or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. Credit-related impairment losses, limited by the amount that the fair value is less than the amortized cost basis, are recorded through an allowance for credit losses in other income (expense), net.

Any unrealized losses from declines in fair value below the amortized cost basis as a result of non-credit factors are recognized in accumulated other comprehensive income, net of tax as a separate component of stockholders’ equity, along with unrealized gains. Realized gains and losses and declines in fair value, if any, on available-for-sale securities are included in other income (expense), net in the condensed consolidated statement of operations and comprehensive loss.

For purposes of identifying and measuring credit-related impairments, the Company’s policy is to exclude applicable accrued interest from both the fair value and amortized cost basis of the related security. The Company has elected to write-off uncollectible accrued interest receivable balances in a timely manner, which is defined by the Company as when interest due becomes 90 days delinquent. The accrued interest write-off will be recorded by reversing interest income. Accrued interest receivable is recorded in other current assets on the condensed consolidated balance sheets.

The following table summarizes the available-for-sale securities (in thousands):

Note 6. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

The Company was eligible to obtain an R&D tax credit as companies in Italy that invest in eligible research and development activities, regardless of the legal form and economic sector in which they operate, can benefit from an R&D tax credit. Such tax credits can only be used to offset payments of certain taxes and contributions (e.g., social contributions, VAT payables, registration fees, income and withholding taxes and other tax-related items that companies usually pay monthly). During the three and six months ended June 30, 2026, the Company recorded no increases to R&D tax credit and $3.0 million increase to R&D tax credit balance due to the release of Italy-related unrecognized tax benefits. During the three and six months ended June 30, 2026, the Company utilized $1.5 million and $2.1 million of R&D tax credit towards related tax payable and payroll-related tax expenses. The Company recorded an adjustment to reduce the reserve for estimated credits that were not probable of being used of$0.4 million for a total of$0.7 million reserved based on forecasted utilization in Italy as of June 30, 2026.

During the three and six months ended June 30, 2026, the Company recorded a $0.5 million reserve for estimated VAT receivable that are not probable of being recovered.

The Company recognized a total reduction to R&D expense of $0.1 million and $1.2 million for the three and six months ended June 30, 2026, and reductions to R&D expense of $0.6 million and $0.9 million for the three and six months ended June 30, 2025.

The balance in the reserve for Italian research and development tax credit and reserve for VAT receivable for thesix months ended June 30, 2026 is as follows (in thousands):

Other Assets

Other assets consisted of the following (in thousands):

Property and Equipment, Net

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

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

During the six months ended June 30, 2026, the Company entered into settlement agreements with vendors pursuant to which they relinquished amounts owed by the Company. This resulted in a$3.7 million gain on settlement of accounts payable for the six months ended June 30, 2026, which is reflected in the condensed consolidated statements of operations and comprehensive loss within research and development.

For the six months ended June 30, 2026 and 2025, the severance accrual activity was as follows (in thousands):

During the six months ended June 30, 2026 and 2025, the Company incurred severance costs related to personnel separation, reflecting payments made and accrued to departing employees.

Other Long-Term Liabilities

Other long-term liabilities consist of the following (in thousands):

Note 7. Leases

In January 2024, the Medolla Lease Agreement for the office space was renegotiated. The new Medolla Lease Agreement includes an additional space and commenced on February 1, 2024, to end on January 31, 2030, substituting the Medolla Lease Agreement commenced in June 2018. In June 2026, the Medolla Lease was terminated, and the Company recognized an immaterial loss in connection with the termination.

The Company recognizes lease expense on a straight-line basis over the term of its operating lease. During the three and six months ended June 30, 2026, the Company recorded lease expense of$43 thousand and$80 thousand, respectively. During the three and six months ended June 30, 2025, the Company recorded lease expense of$38 thousand and$76 thousand, respectively.

Supplemental balance sheet information related to leases as follows (in thousands except lease terms and discount rates):

There areno future minimum lease payments under lease agreements as of June 30, 2026.

Note 8. Debt

In connection with the acquisition of EryDel on October 20, 2023, the Company became a guarantor in respect of the EIB Loan. The EIB Loan was amended and restated as of the acquisition date. The EIB Loan provided for maximum borrowings of 30.0 million euro through four tranches; tranche A,3.0 million euro; tranche B,7.0 million euro; tranche C,10.0 million euro; and tranche D,10.0 million euro. Each tranche was subject to conditions precedent related to the Company’s business and capitalization. Only tranches A and B were drawn. All amounts due under tranche A and B were payable on their maturity date of August 2026. Interest accrued at fixed rates for each tranche and was payable on the maturity date for each Tranche (with the exception of 2% cash interest which was accrued and payable quarterly during fiscal year 2025 pursuant to the terms of the Amendment, which correspondingly reduced the deferred interest rate accruing during such period). The fixed rates ranged from 7.0% to 9.0% per annum.

The Company had elected to account for the EIB Loan at fair value, which required the EIB Loan to be recorded at fair value at issuance and at the end of each reporting period. Gains or losses upon remeasurement were recorded in other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The Company presented separately in other comprehensive loss the portion of the total change in the fair value of the EIB Loan that results from a change in instrument-specific credit risk. The EIB Loan’s fair value at the date it was assumed adjusted its carrying value based on using a discounted cash flow analysis with a discount rate based on a yield curve that was adjusted for credit rating.

In March 2026, the EIB agreed to a full settlement of all obligations associated with the loan with a single payment of 4.8 million euros ($5.5 million) which was paid on March 30, 2026.

For the six months ended June 30, 2026, the Company paid 25 thousand euros ($29 thousand) in interest payments.

Note 9. Series C Preferred Stock

Series C Preferred Stock

On May 18, 2026, the Company filed the Certificate of Designation with the Secretary of State of the State of Delaware in connection with the Orphai Acquisition. The Certificate of Designation provides for the authorization of 294,370 shares of Series C Preferred Stock, of which 67,101.235 shares were issued as merger consideration in connection with the Orphai Acquisition, and 144,200.633 shares were issued in the concurrent May 2026 Financing.

Holders of Series C Preferred Stock are entitled to receive dividends on shares of Series C Preferred Stock (on an as-converted basis) equal to and in the same form as dividends paid on shares of the Company's common stock.

Except as otherwise provided in the Certificate of Designation or as otherwise required by the Delaware General Corporation Law of the State of Delaware, the Series C Preferred Stock has no voting rights and no rights to elect directors.

Upon any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, each holder of Series C Preferred Stock is entitled to receive out of the assets of the Company the same amount that a holder of common stock would receive if the Series C Preferred Stock were converted to common stock, paid pari passu with the holders of common stock. If the assets of the Company are insufficient to pay the holders of Series C Preferred Stock in full, all remaining assets of the Company are distributed ratably to the holders of Series C Preferred Stock and the holders of common stock in accordance with their respective amounts.

The Series C Preferred Stock is not redeemable. However, if, at any time after the earlier of (i) stockholder approval of the Company Stockholder Matters or (ii) six months after the initial issuance of the Series C Preferred Stock, the Company fails to deliver conversion shares to a holder as required, the Company is required, at the request of the holder, to pay cash equal to the fair value of such undelivered shares.

Effective upon Stockholder Approval, each share of Series C Preferred Stock will automatically convert into 52.00 shares of Common Stock, as adjusted for the June 2026 Reverse Stock Split. Prior to that, each share of Series C Preferred Stock is convertible into 52.00 shares of Common Stock at the option of the holder, as adjusted for the June 2026 Reverse Stock Split, at any time following the earlier of (i) Stockholder Approval or (ii) six months after the initial issuance of the Series C Preferred Stock.

Given the cash settlement feature described above and the fundamental transaction provisions of the Series C Preferred Stock, the Series C Preferred Stock was classified as mezzanine equity on the condensed consolidated balance sheets.

Note 10. Stockholders’ Equity

Common Stock

On June 4, 2025, the Company’s shareholders approved an amendment to the Company’s certificate of incorporation to increase the total number of authorized shares of Common Stock from 100,000,000 to 250,000,000. The Reverse Stock Splits did not affect the number of authorized shares of common stock or the par value of the common stock.

ATM Program

On December 18, 2024, the Company entered into a Controlled Equity Offering SM Sales Agreement, with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC (the "Agents"), relating to the sale of shares of the Company's common stock. In accordance with the terms of this agreement, the Company may offer and sell up to $75.0 million shares of common stock.

During the six months ended June 30, 2026, the Company utilized its ATM program to raise net proceeds of approximately$20.3 million by issuing 526,435 shares of common stock. As of June 30, 2026,$47.5 million remained available to be utilized under the ATM program.

May 2026 Private Placement

On May 18, 2026, concurrent with the Orphai Acquisition, the Company entered into the May 2026 Securities Purchase Agreement for a private placement financing with new and returning investors to raise up to$187.0 million in gross proceeds, which includes$115.0 million in gross upfront proceeds, net of$11.4 million of offering costs, commissions, legal and other expenses for net proceeds from the offering of$103.6 million, and up to an additional approximately$72.0 million upon exercise of the Financing Warrants, in which the investors were issued approximately 144,200.633 shares of Series C Preferred Stock (convertible into an aggregate of 7,498,447 shares of common stock, without giving effect to any beneficial ownership limitations) at a price of$797.50 per share and Financing Warrants to purchase up to 72,100.322 shares of Series C Preferred Stock (or 3,749,231 shares, on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations) at an exercise price of$996.90 per share (or$19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). For additional information, see Note 3, 9, and 11 to these unaudited condensed consolidated financial statements.

June 2025 Private Placement

On June 12, 2025, the Company entered into a Securities Purchase Agreement (the “June 2025 Securities Purchase Agreement”), with certain institutional investors (the “Investors”) and certain members of the Company’s management (together with the Investors, the “June 2025 Purchasers”) pursuant to which the Company issued and sold to the June 2025 Purchasers in a private placement (“June 2025 Private Placement”): (i)33,360 shares (the “Shares”) of its common stock, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 10,000 shares of common stock, and (iii) accompanying warrants to purchase up to an aggregate of 43,360 shares of common stock (the “Common Warrants”), for aggregate gross proceeds of approximately $11.5 million (excluding up to approximately $10.4 million of aggregate gross proceeds that may be received in the future upon the cash exercise in full of the Common Warrants issued in the June 2025 Private Placement), before deducting placement agent fees and other expenses payable by the Company. In May 2026, all of the Common Warrants issued in connection with the June 2025 Private Placement were terminated in connection with the consummation of the Orphai Acquisition.

Note 11. Warrants

Acquisition and Financing Warrants

On May 18, 2026, under the Merger Agreement, the Company issued Acquisition Warrants to holders of Orphai warrants to purchase up to an aggregate of 10,964.505 shares of Series C Preferred Stock (or 570,169 shares on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations), at an exercise price of$996.90 per share of Series C Preferred Stock (or$19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split). In addition, on May 18, 2026, concurrent with the Orphai Acquisition, in connection with the May 2026 Financing, the Company issued Financing Warrants to investors in the May 2026 Financing to purchase up to an aggregate of 72,100.322 shares of Series C Preferred Stock (or 3,749,231 shares on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations), at an exercise price of$996.90 per share of Series C Preferred Stock (or$19.17 per share on an as-converted-to-common basis, as adjusted for the June 2026 Reverse Stock Split).

In the aggregate, the Company issued warrants to purchase up to 83,064.827 shares of Series C Preferred Stock (or 4,319,400 shares on an as-converted-to-common basis).

The Acquisition and Financing Warrants do not become exercisable until the trading day following the earlier of the Company's public announcement of (a) top line data from the LAM-001 Trial or (b) the termination or suspension of the LAM-001 Trial, and remain exercisable only through the 30th day following such announcement. Prior to the Company's receipt of stockholder approval for the conversion of the Series C Preferred Stock issued in the Orphai Acquisition in accordance with Nasdaq Listing Rules, the Acquisition and Financing Warrants are exercisable only into shares of Series C Preferred Stock, which is itself subject to certain beneficial ownership limitations established by each holder. As a result of these provisions, the warrants fail the indexation guidance under ASC 815 and are classified as liabilities. The Acquisition and Financing Warrant liability was recorded at fair value as of the issuance date and is subject to remeasurement to estimated fair value at each balance sheet date until the warrants are exercised or expire, with changes in fair value recognized in the condensed consolidated statements of operations.

The proceeds from the May 2026 Financing were first allocated to the full fair value of the Financing Warrants due to the liability classification. The fair value of the Financing Warrants at issuance was $11.5 million. The remaining proceeds of $103.5 million, before issuance costs, were allocated to the Series C Preferred Stock.

As of June 30, 2026, none of the Acquisition and Financing Warrants had been exercised, and 83,064.827 shares underlying the Acquisition and Financing Warrants remained outstanding. The following table is a summary of the Company's Acquisition and Financing Warrants outstanding as of June 30, 2026:

Common and Pre-Funded Warrants

On June 12, 2025, in connection with the sale and issuance of common stock as part of the June 2025 Private Placement, the Company issued Pre-Funded Warrants to purchase up to an aggregate of 10,000 shares of common stock at an exercise price of$0.20 per share and Common Warrants to purchase up to an aggregate of 43,360 shares of common stock at an exercise price of$240.00 per share. Each Share and each Pre-Funded Warrant sold pursuant to the June 2025 Securities Purchase Agreement was accompanied by one Common Warrant. The combined purchase price of each Share and accompanying Common Warrant was$265.00 (which included$25.00 per Common Warrant in accordance with the rules and regulations of Nasdaq). The combined purchase price of each Pre-Funded Warrant and accompanying Common Warrant was$264.80 (equal to the combined purchase price per Share and accompanying Common Warrant, minus$0.20).

The Common Warrants can be exercised into either common stock or Pre-Funded Warrants at the holders' option, and both Common Warrants and Pre-Funded Warrants contain purchase rights that could result in holders receiving securities that more than offsets or neutralizes the effect of a distribution event. As a result of the aforementioned provisions, both Common Warrants and Pre-Funded Warrants fail the indexation guidance under ASC 815 and are classified as liabilities. The Pre-Funded Warrants and Common Warrants liabilities were recorded at fair value as of the issuance date and June 30, 2026, and subject to adjustment to estimated fair value at each balance sheet date until the warrants are settled.

The proceeds from June 2025 Private Placement were first allocated to the full fair value of the Pre-Funded Warrants and Common Warrants due to the liability classification. The fair value of the Pre-Funded Warrants and Common Warrants at issuance was $10.7 million. The remaining proceeds of $0.8 million, before issuance costs, were allocated to the common stock.

During the three and six months ended June 30, 2026, the Company recognized a fair value gain of$4.5 million and$35.6 million, respectively, related to the total warrants.

On January 29, 2026, all 10,000 shares of the Pre-Funded Warrants were exercised through a cashless exercise into 9,989 shares of the Company's common stock. In May 2026, all of the Common Warrants issued in connection with the June 2025 Private Placement were terminated in connection with the consummation of the Orphai Acquisition.

Note 12. Stock-Based Compensation

The Company operates three stock-based compensation plans as of June 30, 2026:

•

2019 Equity Incentive Plan (Quince)

•

2019 Equity Incentive Plan (Novosteo)

•

2022 Inducement Plan (Quince)

•

2013 Orphai Plan (Orphai)

•

2026 Orphai Plan (Orphai)

2019 Equity Incentive Plan (Quince)

On December 4, 2014, the Company’s stockholders approved the 2014 Stock Plan (“2014 Plan”), and on April 25, 2019 amended, restated and re-named the 2014 Plan as the 2019 Equity Incentive Plan (the “Quince 2019 Plan”), which became effective as of May 7, 2019, the day prior to the effectiveness of the registration statement filed in connection with the IPO. The remaining shares available for issuance under the 2014 Plan were added to the shares reserved for issuance under the Quince 2019 Plan.

The Quince 2019 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Company’s employees, directors, and consultants. As of June 30, 2026, the maximum aggregate number of shares that may be issued under the Quince 2019 Plan is 78,309 shares of the Company’s common stock. In addition, the number of shares available for issuance under the Quince 2019 Plan will be annually increased on the first day of each fiscal years beginning with fiscal 2020, by an amount equal to the least of (i)10,732 shares of common stock; (ii)4% of the outstanding shares of its common stock as of the last day of its immediately preceding fiscal year; and (iii) such other amount as the Board of Directors may determine.

The Quince 2019 Plan may be amended, suspended or terminated by the Board of Directors at any time, provided such action does not impair the existing rights of any participant, subject to stockholder approval of any amendment to the Quince 2019 Plan as required by applicable law or listing requirements. Unless sooner terminated by the Company's Board of Directors, the Quince 2019 Plan will automatically terminate on April 23, 2029.

As of June 30, 2026, the Company had 10,510 shares available for future issuance under the Quince 2019 Plan.

Stock Options

Stock options under the Quince 2019 Plan may be granted for periods of up to 10 years and at prices no less than 100% of the fair market value of the shares on the date of grant. If, at the time of grant, the optionee directly owns stocks representing more than 10% of the voting power of all our outstanding capital stock, the exercise price for these options must be at least 110% of the fair value of the underlying common stock. Stock options granted to employees and non-employees generally have a maximum term often years and vest over four years from the vesting commencement date, of which 25% vest on theone-year anniversary of the vesting commencement date, and 75% vest in equal monthly installments over the remaining three years or monthly vesting over 3 to 4 years. We may grant options with different vesting terms from time to time. Unless an employee's or non-employee's termination is due to cause, disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of thethree months from the termination date or expiration of the option, whichever is earlier.

Activity for service-based stock options under the Quince 2019 Plan is as follows:

For the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of$0.7 million and$1.6 million, respectively, related to options granted to employees and non-employees. For the three and six months ended June 30, 2025, the Company recognized stock-based compensation expense of$0.8 million and$1.7 million, respectively, related to options granted to employees and non-employees. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. As of June 30, 2026, total unamortized employee stock-based compensation was$7.2 million, which is expected to be recognized over the remaining estimated vesting period of 1.2 years.

The weighted average grant date fair value per share of stock options granted during the six months ended June 30, 2026 and 2025 was$507.87 and$419.35, respectively.

For the six months ended June 30, 2026, in connection with the separation of employees as part of our restructuring activities, the Company extended the post-termination exercise window from 90 days tofive years for separated employees and for those with consulting agreements allowed awards to continue vesting through term of the agreements. The Company recorded stock-based compensation expense related to the modification of these awards of$0.1 million.

2019 Equity Incentive Plan (Novosteo)

On May 19, 2022, in accordance with the terms of Agreement and Plan of Merger and Reorganization between the Company, Novosteo, Inc., and the other parties thereto, the Company assumed the 2019 Novosteo, Inc. Equity Incentive Plan (the "2019 Novosteo Plan"). The 2019 Novosteo Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Novosteo legacy employees. On the closing date, each outstanding Novosteo stock option granted under Novosteo’s equity compensation plans was converted into a corresponding stock option with the number of shares underlying such option and the applicable exercise price adjusted based on the exchange ratio of 0.0911. Each such converted stock option continues to be subject to substantially the same terms and conditions as applied to the corresponding Novosteo stock option prior to the acquisition. The maximum aggregate number of shares that may be issued under the 2019 Novosteo Plan is 2,725 shares of the Company’s common stock.

The 2019 Novosteo Plan may be amended, suspended or terminated by the Board of Directors at any time, provided such action does not impair the existing rights of any participant, subject to stockholder approval of any amendment to the 2019 Novosteo Plan as required by applicable law or listing requirements. Unless sooner terminated by the Board of Directors, the 2019 Novosteo Plan will automatically terminate on May 20, 2029.

Stock options under the 2019 Novosteo Plan may be granted for periods of up to 10 years and at prices no less than 100% of the fair market value of the shares on the date of grant. If, at the time of grant, the optionee directly owns stocks representing more than 10% of the voting power of all our outstanding capital stock, the exercise price for these options must be at least 110%of the fair value of theunderlying common stock. Stock options granted to employees and non-employees generally have a maximum term of ten years and vest over four years from the vesting commencement date, of which 25% vest on theone-year anniversary of the vesting commencement date, and 75% vest in equal monthly installments over the remaining three years or monthly vesting over 3 to 4 years. We may grant options with different vesting terms from time to time. Unless an employee's or non-employee's termination is due to cause, disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of the three months from the termination date or expiration of the option, whichever is earlier.

As of June 30, 2026, the Company had 960 shares available for future issuance under the 2019 Novosteo Plan.

Activity for service-based stock options under the 2019 Novosteo Plan is as follows:

For the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of$0 and$44 thousand, respectively, related to options granted to employees and non-employees for the 2019 Novosteo Plan. For the three and six months ended June 30, 2025, the Company recognized stock-based compensation expense of$48 thousand and$97 thousand, respectively, related to options granted to employees and non-employees for the 2019 Novosteo Plan. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. As of June 30, 2026, there wasno total unamortized employee stock-based compensation.

Restricted Stock Awards

There was no restricted stock awards activity during the six months ended June 30, 2026.

For the three and six months ended June 30, 2026, the Company recognizedno stock-based compensation expense related to restricted stock awards. For thethree and six months ended June 30, 2025, the Company recognized stock-based compensation expense of$0.1 million and$0.2 million related to restricted stock awards. The compensation expense is allocated on a departmental basis, based on the classification of the award holder. No income tax benefits have been recognized in the condensed consolidated statement of operations and comprehensive loss for stock-based compensation arrangements. The fair value of vested restricted stock awards was$0.1 million and$0.2 million for the three and six months ended June 30, 2025, respectively.

2022 Inducement Plan

On May 9, 2022, the Company's Board of Directors approved 20,000 shares of common stock, that may be offered or issued under the Quince Therapeutics, Inc. 2022 Inducement Plan (the "2022 Inducement Plan"). The 2022 Inducement Plan was adopted by the independent members of the Board of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules (“Nasdaq Rule 5635(c)(4)”). In accordance with Nasdaq Rule 5635(c)(4), awards under those plans may only be made to an employee who has not previously been an employee or member of the Board of Directors or of any board of directors of any parent or subsidiary of the Company, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The terms and conditions of the 2022 Inducement Plan are substantially similar to those of the Quince 2019 Plan.

Options under the 2022 Inducement Plan may be granted for periods of up to 10 years at prices no less than 100% of the fair market value of the shares on the date of grant. Options granted to employees may have different performance goals or other vesting provisions (including continued employment) in accordance with the applicable award agreement. Unless an employee's termination service is due to disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of the three months from the date of termination or expiration of the option, whichever is earlier.

As of June 30, 2026, the Company had 8,333 shares available for future issuance under the 2022 Inducement Plan.

Activity for service-based stock options under the 2022 Inducement Plan is as follows:

For the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of$0.2 million and$0.5 million, respectively, related to options granted to employees for the 2022 Inducement Plan. For the three and six months ended June 30, 2025, the Company recognized stock-based compensation expense of$0.3 million and$0.7 million, respectively, related to options granted to employees for the 2022 Inducement Plan. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. As of June 30, 2026, there wasno total unamortized employee stock-based compensation.

Orphai Equity Incentive Plans

In connection with the Orphai Acquisition, the Company assumed all outstanding and unexercised stock options previously granted by Orphai under its 2013 Employee, Director, and Consultant Equity Incentive Plan (the "2013 Orphai Plan"), as amended, and its 2026 Stock Incentive Plan (the "2026 Orphai Plan") (collectively, the "Orphai Equity Incentive Plans"), whether or not vested as of the acquisition date.

Under the terms of the Merger Agreement, each Orphai stock option was converted into an option to purchase shares of the Company's common stock, with (i) the number of shares subject to each option determined by multiplying the number of shares subject to the original Orphai option by an exchange ratio of 0.6935, rounded down to the nearest whole share, and (ii) the per-share exercise price determined by dividing the original per-share exercise price by the same exchange ratio. The vesting schedule and remaining contractual term of each replacement award were not modified in connection with the assumption, and no vesting was accelerated.

Activity for service-based stock options under the 2013 Orphai Plan is as follows:

For the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of$0.5 million, related to options granted to employees and non-employees. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. As of June 30, 2026, total unamortized employee stock-based compensation was$0.1 million, which is expected to be recognized over the remaining estimated vesting period of 0.13 years.

The weighted average grant date fair value per share of stock options assumed during the six months ended June 30, 2026 was$19.59.

Activity for service-based stock options under the 2026 Orphai Plan is as follows:

For the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of$10.7 million, related to options granted to employees and non-employees. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. As of June 30, 2026, total unamortized employee stock-based compensation was$10.5 million, which is expected to be recognized over the remaining estimated vesting period of 1.38 years.

The weighted average grant date fair value per share of stock options assumed during the six months ended June 30, 2026 was$19.80.

Stock-Based Compensation Expense

The following table summarizes employee and non-employee stock-based compensation expense for thethree and six months ended June 30, 2026 and 2025 and the allocation within the condensed consolidated statements of operations and comprehensive loss (in thousands):

Note 13. Income Taxes

After considering all available positive and negative evidence, including cumulative losses, the Company concluded that it remains more likely than not that its net deferred tax assets will not be realized. Accordingly, the Company maintains a full valuation allowance against its net deferred tax assets.

The Company recorded an income tax expense of$0.1 million for the three months ended June 30, 2026 and income tax benefit of$5.3 million for the six months ended June 30, 2026, primarily related to the discrete reversal of uncertain tax position liabilities associated with certain intellectual property following changes in facts and circumstances in the six months ended June 30, 2026 that affected the valuation of the intellectual property. This benefit was partially offset by current-period Italian income tax expense. The primary differences between the Company’s effective tax rate and the U.S. federal statutory tax rate were the change in valuation allowance and the discrete reversal of uncertain tax position liabilities.

The Company recorded$67 thousand and$0.1 million of tax expense for the three and six months ended June 30, 2025, respectively, primarily related to foreign withholding tax and interest on the uncertain tax position liability.

Note 14. Net Loss Per Share

Basic net loss per common share is determined by dividing the net loss by the weighted-average common shares outstanding during the period. The preferred shares do not have substantive preferential rights over common shares and are considered in-substance common shares and treated as a separate class of common stock for the purposes of computing earnings per share.

Basic and diluted net loss per common share is determined by dividing the net loss by the weighted-average common shares outstanding during the period, as follows (net loss in thousands):

The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the periods presented because including them would have been antidilutive:

Note 15. Intangible Assets

EryDel Intangible Assets

The following table provides details of the carrying amount of the Company's indefinite-lived intangible asset (in thousands):

The following table provides details of the carrying amount of the Company's finite-lived intangible asset (in thousands, except useful life):

In January 2026, the Company ceased clinical development of eDSP as the primary and secondary endpoints did not achieve statistical significance in its Phase 3 NEAT clinical trial. As a result, several of the assumptions used in determining the initial fair value have changed including expected cash flows and thus triggered the need for an interim impairment assessment as required under ASC 350. As a result, the fair value was determined to be significantly below its carrying value and the Company recognized a total impairment charge of $67.8 million for indefinite and finite-lived intangible assets during thesix months ended June 30, 2026.

Note 16. Segment Information

The Company manages its business activities on a consolidated basis and operates asone operating and reportable segment for the purposes of assessing performance and making operating decisions.

Operating segments are defined as components of an enterprise for which discrete financial information is available and is evaluated regularly by the CODM, in deciding how to allocate resources and assess performance.

The Company’s Chief Executive Officer, who is the CODM, reviews financial information on a consolidated basis for purposes of allocating and evaluating financial performance. The CODM evaluates the Company’s performance and resource allocation by analyzing consolidated net loss, as reported on the condensed consolidated statement of operations and comprehensive loss. This assessment involves comparing net loss across prior periods, the Company's forecast, and following the Orphai Acquisition, total expenditures related to LAM-001 product development.

The measure of segment assets reviewed by the CODM is the consolidated total assets, as reported on the condensed consolidated balance sheets. The following table presents the measure of segment assets regularly provided to the CODM (in thousands):

The following table presents financial information, including significant segment expenses, which are regularly provided to the CODM and included within condensed consolidated statements of operations and comprehensive loss (in thousands):

Other segment items within net loss include interest income, other income (expense), net, and income tax expense.

The Company’s long-lived assets consist primarily of property, plant and equipment, net, and operating lease right-of-use assets are maintained in Italy. As of June 30, 2026 and December 31, 2025, no individual country other than the U.S. accounted for 10% or more of these assets.