Climb Bio, Inc.

1. Nature of Operations and Basis of Presentation

Organization

Climb Bio, Inc. (the Company) is a clinical-stage biotechnology company developing therapeutics for patients with immune-mediated diseases. The Company’s pipeline includes budoprutug and CLYM116. Budoprutug is an anti-CD19 monoclonal antibody designed to treat a broad range of B-cell mediated diseases. The Company is currently developing budoprutug for the treatment of primary membranous nephropathy, immune thrombocytopenia, and systemic lupus erythematosus. CLYM116 is an anti-APRIL (A PRoliferation-Inducing Ligand) monoclonal antibody currently being developed for the treatment of immunoglobulin A nephropathy. The Company was incorporated on October 18, 2018 in Delaware, and its corporate headquarters is in Massachusetts.

Risks and Uncertainties

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, reliance on single-source suppliers and manufacturers, availability of raw materials, patentability of the Company’s product candidates and processes and clinical efficacy and safety of the Company’s product candidates, compliance with government regulations and the need to obtain additional financing to fund operations. Budoprutug, CLYM116, or any product candidate the Company may develop will require significant additional research and development efforts, including extensive nonclinical studies, clinical trials, and regulatory approval, prior to commercialization. These efforts will require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting.

There can be no assurance that any future research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained or maintained, that any product candidate developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if any future product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company operates in an environment of rapid technological change and substantial competition from other pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and other third parties.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements reflect the operations of the Company and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP) and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC) for Quarterly Reports on Form 10-Q. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB).

The accompanying unaudited interim condensed consolidated financial statements as of September 30, 2026 and for the three and nine months ended September 30, 2026 and 2025, are unaudited. The consolidated balance sheet as of December 31, 2025 was derived from the audited financial statements as of and for the year ended December 31, 2025, but does not include all disclosures required by U.S. GAAP. The unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with the audited annual financial statements as of and for the year ended December 31, 2025, and, in the opinion of management, reflect all adjustments, consisting solely of normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2026, the condensed results of its operations for the three and nine months ended September 30, 2026 and 2025, and its cash flows for the nine months ended September 30, 2026 and 2025. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2026 and 2025 are also unaudited. The condensed results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected for the full year ending December 31, 2026 or any other period. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2026 (Annual Report).

Liquidity

Since inception, the Company has experienced recurring losses from operations and generated negative cash flows from operations. During the three and nine months ended September 30, 2026, the Company incurred a net loss of$14.6 million and$41.8 million, respectively, and for the nine months ended September 30, 2026, the Company had negative operating cash flows of$36.9 million. The Company has an accumulated deficit of$331.5 million as of September 30, 2026 and expects to incur additional losses from operations in the future until such time, if ever, that the Company can generate significant sales of its product candidates currently in development.

Since inception, the Company has funded its operations with proceeds from the sale and issuance of shares of its redeemable convertible preferred stock, its initial public offering, and the sale and issuance of shares in private placements of shares of the Company’s common stock and pre-funded warrants to certain institutional investors. Cash, cash equivalents and marketable securities were$227.6 million as of September 30, 2026. Based on its current operating plan, the Company expects this balance will be sufficient to meet its projected operating requirements for at least the next twelve months from the filing date of these unaudited condensed consolidated financial statements. The Company anticipates that it will need to raise substantial financing in the future to fund its operations. The Company may finance future cash needs through the sale of equity, debt financings or other capital sources, which could include income from collaborations, strategic partnerships or other strategic arrangements. There are no assurances that the Company will be able to raise sufficient amounts of funding in the future on acceptable terms, or at all.

2. Summary of Significant Accounting Policies

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until those standards apply to private companies. The Company has elected to avail itself of this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these unaudited condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

For additional information related to the Company’s other significant accounting policies, refer to Note 2, Summary of Significant Accounting Policies, to the Company’s audited consolidated financial statements included in the Company’s Annual Report.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Key management estimates include those related to the accrual of research and development expenses and the valuation of stock-based awards. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate.

Restricted Cash

In connection with the Company amending its lease agreement for its headquarters in Wellesley Hills, MA, in May 2026, the Company was required to provide a security deposit in the form of a letter of credit. The Company has classified this restricted cash in other long-term assets within its condensed consolidated balance sheets as of September 30, 2026. There was no restricted cash as of December 31, 2025.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09 (ASU 2023-09), Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, the following for public business entities: (i) enhanced disclosures of specific categories of reconciling items included in the rate reconciliation, as well as additional information for any of these items meeting certain qualitative and quantitative thresholds; (ii) disclosure of the nature, effect and underlying causes of each individual reconciling item disclosed in the rate reconciliation and the judgment used in categorizing them if not otherwise evident; and (iii) enhanced disclosures for income taxes paid, which includes federal, state, and foreign taxes, as well as for individual jurisdictions over a certain quantitative threshold. The amendments in ASU 2023-09 eliminate the requirement to disclose the nature and estimate of the range of the reasonably possible change in unrecognized tax benefits for the 12 months after the balance sheet date. The effective date of this update for non-public companies is for fiscal years beginning after December 15, 2025; early adoption is permitted. As the Company qualified for emerging growth company status when ASU 2023-09 was effective for public companies, the Company has elected to adopt this standard as of the effective date for a non-public company. The Company expects ASU 2023-09 to require additional disclosures in the notes to its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03 (ASU 2024-03), Disaggregation of Income Statement Expenses, which requires additional disclosures about specific types of expenses included in the expense captions presented on the face of the income statement, as well as disclosures about selling expenses. The provisions of ASU 2024-03 are effective for public business entities for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The guidance is to be applied prospectively, with the option for retrospective application. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements.

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial statements.

3. Marketable Securities

Marketable securities consisted of available-for-sale securities as follows (in thousands):

Realized gains and losses recognized on the sale, maturity or redemption of marketable securities were not material for the three and nine months ended September 30, 2026 and 2025. To date, the Company has not recognized any allowances for credit losses or impairments in relation to its available-for-sale marketable securities as these marketable securities are comprised of high credit quality, investment grade securities that the Company does not intend or expect to be required to sell prior to their anticipated recovery, and any decline in fair value of these securities is attributable to factors other than credit losses. All marketable securities with unrealized losses presented in the previous tables have been in a continuous unrealized loss position for less than 12 months or the loss is not material. The Company determined credit losses related to marketable securities were immaterial for the three and nine months ended September 30, 2026 and 2025.

As of September 30, 2026, the Company’s long-term marketable securities have contractual maturity dates betweenone andtwo years.

4. Fair Value Measurements

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

Cash equivalents and U.S. Treasury securities were valued by the Company based on quoted market prices for identical securities, which represent a Level 1 measurement within the fair value hierarchy. There have been no changes in valuation techniques, inputs utilized or transfers between fair value measurement levels in the periods presented. Corporate bonds and agency securities were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. The carrying amounts reflected in the Company’s condensed consolidated balance sheets for cash and cash equivalents, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate fair value due to the short-term nature of these assets and liabilities.

5. Accrued Expenses and Other Current Liabilities

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

6. Commitments and Contingencies

Leases

The Company leases office space for their headquarters under a non-cancelable operating lease in Wellesley, Massachusetts. In May 2026, the Company entered into the Second Amendment of Lease (Second Amendment) which provided for an extended lease term of an additional three years and additional square footage. The new annual base rent is approximately $0.6 million per year and there isno option to extend the lease after the three-year term. Accordingly, the Company recorded an increase to operating lease right-of-use assetsand operating lease liabilities of $1.1 million, net of the tenant improvement allowance. In addition, the Company recognized a modification to the existing lease agreement due to the change in the term of lease as a result of the Second Amendment, resulting in a decrease of the operating lease liabilities and corresponding right-of-use asset of approximately $0.3 million. There have been no other significant changes to the Company’s lease agreements during the three and nine months ended September 30, 2026. For additional information on the Company’s operating leases, see Note 7, Leases, of the consolidated financial statements in the Annual Report.

License Agreements (Budoprutug)

On June 27, 2024, the Company completed its acquisition (the Acquisition) of Tenet Medicines, Inc. (Tenet). As a result of the Acquisition, the following legacy Tenet agreements effectively became agreements of the Company.

Acelyrin Asset Purchase Agreement

On January 11, 2024, Tenet entered into an asset purchase agreement (the Asset Purchase Agreement) with Acelyrin, Inc. (Acelyrin) and WH2, LLC, which was subsequently transferred to the Company by operation of law upon the closing of the Acquisition, providing for the acquisition of certain assets of Acelyrin related to budoprutug, including certain assigned contracts. Under these assigned contracts, the Company received worldwide license (with the right to sublicense) rights to develop, manufacture, use and commercialize budoprutug for any non-oncology indication, and assumed certain liabilities of Acelyrin.

In addition, the Company inherited the rights and obligations, including financial obligations, under the CRH Agreement (as defined below) and the ProBioGen Agreement (as defined below).

In consideration for the license and other rights the Company received under the Asset Purchase Agreement with respect to Products (as such term is defined in the Asset Purchase Agreement), the Company is obligated to (i) make total payments of up to $157.5 million to Acelyrin upon the achievement of various development, regulatory and commercial milestones, (ii) pay royalties in the single-digit percentages, subject to specified reductions, to Acelyrin on worldwide net sales in a given calendar year, and (iii) make non-refundable and non-creditable payments to Acelyrin on sublicense income with rates ranging from the low single digit to mid teen percent depending on the stage of development of the most advanced Product at the time of such sublicense.

On December 31, 2025, the Company filed a complaint in Delaware Superior Court against Alumis Inc. and its wholly owned subsidiary, Acelyrin, relating to a dispute concerning potential milestone payments owed under the Asset Purchase Agreement as further described below under Legal Proceedings.

The Company records expense related to milestone payments when achievement of the milestone is assessed as probable. During the three and nine months ended September 30, 2026 and 2025, the Company did not recognize any research and development expense related to milestone payments under the Asset Purchase Agreement.

For additional information related to the Asset Purchase Agreement, please read Note 8, Commitments and Contingencies, to the Company’s audited consolidated financial statements included in the Annual Report.

CRH Agreement

In connection with the Asset Purchase Agreement, in January 2024 Tenet was assigned a license agreement with Cancer Research Technology Limited (CRH) and, in connection with such assignment, Tenet entered into an amended and restated license agreement with CRH (the CRH Agreement) which was subsequently transferred to the Company by operation of law upon the closing of the Acquisition. The CRH Agreement granted the Company a worldwide exclusive license (other than specified patent rights and materials, which are licensed to the Company on a non-exclusive basis) to research, develop, test, manufacture or sell certain licensed products related to budoprutug, for all therapeutic uses except for oncology indications. The Company is permitted to grant a sublicense under these licenses with CRH’s prior written consent.

The Company is obligated to pay CRH a mid-five figure digit fee on each anniversary of the effective date and up to an aggregate of £106.8 million ($141.9 million as of September 30, 2026) upon the achievement of specified development, regulatory, commercial and sales milestone events, including: (i) payments of up to mid-six figure digits in pounds sterling for certain development milestones, (ii) payments of up to low-eight figures in pounds sterling per indication (for up to three indications) for certain regulatory and commercial milestones and (iii) payments up to mid-eight figures in pounds sterling for certain sales milestones. The Company is also obligated to pay tiered royalties ranging from a rate in the mid-single digit to high-single digit percentage on net sales. The Company is also responsible for a sublicensing revenue payment ranging from a rate in the mid-single digit to mid-double digits for any sublicense revenue.

The Company records expense related to milestone payments when achievement of the milestone is assessed as probable. During the three and nine months ended September 30, 2026, the Company did not recognize any research and development expense related to the milestones. During the three and nine months ended September 30, 2025, the Company recognized $0.3 million of research and development expense related to a milestone.

For additional information related to the CRH Agreement, please read Note 8, Commitments and Contingencies, to the Company’s audited consolidated financial statements included in the Annual Report.

ProBioGen Agreement

Under the Asset Purchase Agreement, Tenet was assigned a cell line development, manufacturing services and license agreement (the ProBioGen Agreement) originally entered into by ValenzaBio, Inc. and ProBioGen AG (ProBioGen) in February 2021, which was subsequently transferred to the Company by operation of law upon the closing of the Acquisition. The ProBioGen Agreement granted the Company a non-exclusive license to use cell lines in which ProBioGen’s proprietary technology is applied, to research, develop, manufacture, use, sell, offer to sell, import or export budoprutug. This license includes a non-exclusive sublicense by ProBioGen of certain third-party patent rights, limited to the use of budoprutug.

The Company is obligated to (i) make payments of up to €10.0 million ($11.4 million as of September 30, 2026) upon the achievement of certain development, manufacturing and commercial milestones, including the start of a Phase 2 clinical trial for budoprutug, and (ii) make milestone payments of up to €7.0 million ($8.0 million as of September 30, 2026) upon the achievement of certain sales milestones. If the Company elects to contract ProBioGen to perform certain manufacturing services for budoprutug, the milestone payments would be reduced by €1.1 million ($1.2 million as of September 30, 2026).

The Company records expense related to milestone payments when achievement of the milestone is assessed as probable. During the three and nine months ended September 30, 2026, the Company didnot recognize any research and development expense related to the milestones. During the three and nine months ended September 30, 2025, the Company recognized none and $0.8 million of research and development expense related to a milestone, respectively.

For additional information related to the ProBioGen Agreement, please read Note 8, Commitments and Contingencies, to the Company’s audited consolidated financial statements included in the Annual Report.

License Agreement (CLYM116)

On January 8, 2025, the Company entered into the Technology Transfer and Exclusive License Agreement (Mabworks Agreement) pursuant to which Mabworks granted to the Company (i) an exclusive (even as to Mabworks and its affiliates), sublicensable right and license under certain patent rights and related know-how (the Licensed Intellectual Property) to develop, manufacture and commercialize Mabworks’ proprietary antibodies associated with Mabworks’ proprietary antibody program, CLYM116 and products containing CLYM116 (Licensed Products) outside of mainland China, Hong Kong, Macau, and Taiwan (Greater China), (ii) a non-exclusive, sublicensable right and license under the Licensed Intellectual Property to manufacture CLYM116 and Licensed Products in Greater China (the Licensed Territory) and (iii) a non-exclusive, sublicensable right and license under the Licensed Intellectual Property to develop CLYM116 and Licensed Products in Greater China in connection with certain global clinical studies (as described below).

Under the terms of the Mabworks Agreement, the Company paid to Mabworks a $9.0 million upfront payment, and the Company is obligated to pay a total of up to $30.0 million upon the achievement of certain development and regulatory milestones pertaining to the first indication for a Licensed Product, additional lower amounts upon the achievement of certain development and regulatory milestones pertaining to up to two additional indications for a Licensed Product and a total of up to $832.0 million upon the achievement of certain commercial milestones for all Licensed Products. In addition, the Company is obligated to pay Mabworks tiered royalties in the low-to mid-single-digit percentages on aggregate annual net sales of all Licensed Products in the Licensed Territory.

The Company recorded the upfront payment of $9.0 million as research and development expenses in the first quarter of 2025 in the unaudited condensed consolidated statements of operations and comprehensive loss. The Company records expense related to milestone payments when achievement of the milestone is assessed as probable. During the three and nine months ended September 30, 2026 and 2025, the Company didnot recognize any research and development expense related to a milestone.

On July 14, 2026, the Company and Mabworks entered into an Amended and Restated Technology Transfer and Exclusive License Agreement (the A&R Mabworks Agreement), which amended and restated the Mabworks Agreement in its entirety. The A&R Mabworks Agreement establishes a joint development committee and a framework under which the parties may conduct joint development activities for CLYM116, including clinical trials, pursuant to a collaboration development plan, with the costs of each such activity shared on terms agreed by the parties, and provides that technology jointly developed by the parties in the course of such activities is jointly owned. The upfront payment, milestone, royalty and sublicense payment provisions of the Mabworks Agreement were not changed, and no consideration was paid or became payable in connection with the amendment and restatement. Accordingly, the Company did not recognize any amounts in connection with the A&R Mabworks Agreement. Unless the context requires otherwise, references to the Mabworks Agreement include the A&R Mabworks Agreement.

For additional information related to the Mabworks Agreement, please read Note 8, Commitments and Contingencies, to the Company’s audited consolidated financial statements included in the Annual Report.

Legal Proceedings

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company records accruals for estimated losses when available information indicates a loss is probable and reasonably estimable. Significant judgment is required to determine both probability and the estimated amount. The Company expenses the costs related to its legal proceedings as they are incurred.

On December 31, 2025, the Company filed a complaint in Delaware Superior Court (the Court) against Alumis Inc. and its wholly owned subsidiary, Acelyrin, relating to a dispute concerning potential milestone payments owed under the Asset Purchase Agreement seeking a declaratory judgment that the Company’s budoprutug drug candidate is not a Product under the Asset Purchase Agreement, and that the Company does not owe a milestone payment sought by Alumis in connection with its development of budoprutug. On August 4, 2026, the Court held a hearing on the Company's motion for summary judgment and Alumis’ motion to dismiss. A ruling on the motions is pending. The Company is unable to predict the timeline for resolution or the outcome of this matter.

As of the date of these unaudited condensed consolidated financial statements, the Company is not party to any other material legal matters or claims.

Indemnification

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless, and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. In addition, the Company has entered into indemnification agreements with members of its board of directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. To date, the Company has not incurred any material costs as a result of such indemnification provisions. The Company is not currently aware of any indemnification claims and has not accrued any liabilities related to such obligations in its unaudited condensed consolidated financial statements as of September 30, 2026.

7. Related Party Transactions

RA Capital Management, LP (RA Capital Management)

In December 2025, the Company entered into an exchange agreement (the Exchange Agreement) with RA Capital Management and an entity affiliated with RA Capital Management (the Exchanging Holder), pursuant to which the Exchanging Holder exchanged an aggregate of 20,440,000 shares of the Company’s common stock, beneficially owned by the Exchanging Holder for pre-funded warrants to purchase the same number of shares of the Company’s common stock (subject to adjustment in the event of stock splits, recapitalizations and other similar events affecting the Company’s common stock), with an exercise price of $0.0001 per share. The pre-funded warrants are exercisable at any time and do not expire. The Exchange Agreement did not have any cash impact, and the shares of common stock exchanged for the pre-funded warrants were retired.

In April 2026, the Company entered into a securities purchase agreement (the Securities Purchase Agreement) with certain institutional accredited investors, including an affiliate of RA Capital Management. Pursuant to the Securities Purchase Agreement, the Company agreed to issue and sell to an affiliate of RA Capital Management, in a private placement, pre-funded warrants to purchase 2,106,000 shares of the Company’s common stock at a price of $9.4999 per pre-funded warrant. The Company received approximately $20.0 million from an affiliate of RA Capital Management related to sale of the pre-funded warrants. Each pre-funded warrant issued in connection with the Securities Purchase Agreement has an exercise price of $0.0001 per share, is exercisable at any time until the pre-funded warrants are exercised in full and does not expire. Refer to Note 10, Stockholders’ Equity (Deficit), for additional details on the Securities Purchase Agreement.

RA Capital Management is not entitled to exercise any portion of the December 2025 or April 2026 pre-funded warrants if, upon giving effect or immediately prior to such exercise, such exercise would result in the aggregate number of shares of common stock beneficially owned by RA Capital Management and their respective affiliates, collectively, to exceed 33.0% of the number of shares of common stock issued and outstanding immediately after giving effect to such exercise, as such percentage ownership is determined in accordance with the terms of the pre-funded warrant. The Exchanging Holder may increase or decrease such percentage to any other percentage not in excess of 33.0%; provided that any such increase will not be effective until the 61st day after notice from the Exchanging Holder is delivered to the Company. In addition, following the date of the Exchange Agreement, RA Capital Management may exchange additional shares of common stock beneficially owned by it or its affiliates for pre-funded warrants, subject to certain terms and conditions, including the Company’s written consent.

The Company determined that the pre-funded warrants from both the December 2025 Exchange Agreement and the April 2026 Securities Purchase Agreement did not meet the classification of a liability under ASC 480, Distinguishing Liabilities from Equity.

The Company concluded that the pre-funded warrants should be classified as equity based on an analysis performed under ASC 815-40, Contracts in an Entity’s Own Equity.

8. Stock-Based Compensation

2019 and 2021 Equity Incentive Plans

The Company has outstanding awards under its 2019 Equity Incentive Plan (the 2019 Plan), but is no longer granting awards under this plan. The Company’s 2021 Equity Incentive Plan (the 2021 Plan and, together with the 2019 Plan, the Plans) provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units (RSUs), stock appreciation rights and other stock-based awards to the Company’s employees, officers, directors and consultants. Any shares that are returned under the 2019 Plan as a result of cancellation or forfeiture become available for grant under the 2021 Plan. Further, the number of shares of common stock reserved for issuance under the 2021 Plan automatically increases on January 1 of each year continuing through and including January 1, 2031, by 5% of the total number of shares of common stock outstanding on December 31 of the immediately preceding calendar year, or a lesser number of shares determined by the Company’s board of directors. The number of shares reserved for issuance under the 2021 Plan was increased by 2,388,316 shares effective as of January 1, 2026 in accordance with the provisions of the 2021 Plan described above. On June 5, 2026, the Company’s stockholders approved an amendment to the 2021 Plan to amend the provision providing for an automatic share pool increase to include pre-funded warrants in the calculation of the annual increase. As a result of the amendment, the next automatic annual share pool increase will come into effect on January 1, 2027 and it will be equal to the lesser of (I)5% of the sum of (1) the number of outstanding shares of common stock and (2) the number of shares of the Company's common stock subject to pre-funded warrants, each as of the immediately preceding December 31, and (II) an amount determined by the board of directors. As of September 30, 2026,3,096,930 shares remained available for future grant under the 2021 Plan.

Under the terms of the 2021 Plan, options are granted at an exercise price no less than fair value of the Company’s common stock on the grant date, except in certain cases related to significant corporate transactions. Options expire no later thanten years from the date of the grant.

2025 Inducement Plan

In March 2025, the Company’s board of directors adopted the 2025 Inducement Plan (the Inducement Plan), pursuant to which the Company may grant nonstatutory stock options, stock appreciation rights, restricted stock, RSUs and other stock-based awards with respect to an aggregate of 1,250,000 shares of its common stock. Awards under the Inducement Plan may only be granted to new employees who were not previously an employee or director of the Company or are commencing employment with the Company following a bona fide period of non-employment, in either case, as an inducement material to the individual’s entering into employment with the Company in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4). On September 30, 2025, the Company’s board of directors approved an amendment to the Inducement Plan to increase the number of shares of common stock authorized for issuance under the Inducement Plan by 750,000 shares. As of September 30, 2026,145,834 shares were available for issuance under the Inducement Plan.

Employee Stock Purchase Plan

The Company’s 2021 Employee Stock Purchase Plan (the ESPP) allows employees, including executive officers, to contribute up to 15% of their earnings, subject to certain limitations, for the purchase of the Company’s common stock at a price per share equal to the lower of (a)85% of the fair market value of a share of common stock on the first day of the offering period, or (b)85% of the fair market value of a share of common stock on the last day of the offering period. The number of shares of common stock reserved for issuance under the ESPP automatically increases on January 1 of each calendar year through and including January 1, 2031, by the lesser of (1)1% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year or (2) a number of shares determined by the Company’s board of directors. Shares subject to purchase rights granted under the ESPP that terminate without having been exercised in full will not reduce the number of shares available for issuance under the ESPP. The number of shares reserved for issuance under the ESPP was increased by 477,663 shares effective as of January 1, 2026 in accordance with the provisions of the ESPP described above. As of September 30, 2026,20,359 shares had been purchased under the ESPP and 2,194,083 shares remained available for issuance under the ESPP.

Stock Option Valuation

The fair value of stock option grants is estimated on the date of grant using the Black Scholes option pricing model. Volatility is estimated based on the historical and implied volatilities of comparable publicly traded companies as the Company does not have sufficient history of trading in its common stock. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The relevant data used to determine the fair value of the stock options during thethree and nine months ended September 30, 2026 and 2025 is as follows:

Stock Option Activity

Outstanding stock options consist of option grants with service-based vesting conditions, typically 25% on the first anniversary of the grant date with the remainder vesting monthly over the following three years. The activity for the stock options is as follows:

The aggregate intrinsic value disclosed in the above table is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had strike prices lower than the fair value of the Company’s common stock.

The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2026 and 2025 was$4.96 and $1.35 per share, respectively.

Restricted Stock Units

The Company has outstanding RSUs with service-based vesting conditions and RSUs with performance-based vesting conditions. The activity for RSUs is as follows:

Stock-Based Compensation

The following table sets forth stock-based compensation expense included in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss (in thousands):

As of September 30, 2026, there was $19.4 million of total unrecognized compensation cost related to unvested awards expected to vest, which is expected to be recognized over a weighted average period of 2.8 years.

9. Net Loss Per Share

The Company has generated a net loss in all periods presented, therefore the basic and diluted net loss per share are the same as the inclusion of the potentially dilutive securities would be anti-dilutive. Basic and diluted net loss per share are computed using the weighted-average number of shares of common stock outstanding for the period. The Company issued pre-funded warrants in December 2025 and April 2026. The shares of common stock underlying the pre-funded warrants are included in the calculation of basic and diluted net loss per share because they are considered shares issuable for little or no consideration under ASC 260, Earnings Per Share. Refer to Note 7, Related Party Transactions, for additional details on the December 2025 and April 2026 pre-funded warrants issuance. The following table shows the computation of basic and diluted net loss per share (in thousands, except share and per share data):

The following table sets forth the outstanding potentially dilutive securities, presented as of period-end, that have been excluded in the calculation of diluted net loss per share for the periods presented because to do so would be anti-dilutive:

10. Stockholders’ Equity (Deficit)

Preferred Stock

Pursuant to the terms of the Company’s amended and restated certificate of incorporation, the Company has 10,000,000 authorized shares of preferred stock, par value $0.0001 per share, all of which shares of preferred stock are undesignated. The Company’s Board of Directors is expressly authorized, without further action by the Company’s stockholders, to issue such shares of preferred stock from time to time on terms it may determine, to divide shares of preferred stock into one or more series and to fix the voting powers, designations, preferences and restrictions of preferred stock. There wereno issued and outstanding shares of preferred stock as of September 30, 2026 and December 31, 2025.

Common Stock

Pursuant to the terms of the Company’s amended and restated certificate of incorporation, the Company has 250,000,000 authorized shares of common stock, par value $0.0001 per share. There were 57,728,178 and 47,766,338 shares of common stock issued and outstanding as of September 30, 2026 and December 31, 2025, respectively.

2026 Private Placement

In April 2026, the Company entered into the Securities Purchase Agreement with certain institutional accredited investors (the Investors), including an affiliate of RA Capital Management, pursuant to which the Company agreed to issue and sell to the Investors in a private placement an aggregate of 9,481,000 shares of the Company’s common stock, par value $0.0001 per share (the Shares), at a price of $9.50 per Share and, to RA Capital Management in lieu of Shares, pre-funded warrants to purchase 2,106,000 shares of the Company’s common stock (the Pre-Funded Warrants) at a price of $9.4999 per Pre-Funded Warrant (the 2026 Private Placement).

The 2026 Private Placement closed in April 2026, and the Company received aggregate net proceeds of approximately $103.4 million, after deducting placement agent fees and offering expenses. The Company has granted the Investors indemnification rights with respect to its representations, warranties, covenants and agreements under the Securities Purchase Agreement.

ATM Program

In March 2025, the Company entered into an Equity Distribution Agreement (the Distribution Agreement) with Oppenheimer & Co. Inc., as sales agent (Oppenheimer), pursuant to which the Company may offer and sell shares of its common stock from time to time through Oppenheimer having an aggregate offering price of up to $22.4 million in an at-the-market offering. The Company terminated the Distribution Agreement effective as of June 11, 2026. The Company did not incur any termination penalties as a result of the termination of the Distribution Agreement. As of the effective date of the termination of the Distribution Agreement, the Company had sold no shares of common stock pursuant to the Distribution Agreement.

In June 2026, the Company entered into an Open Market Sale Agreement℠ with Jefferies LLC, as sales agent, to provide for the issuance and sale of up to $100.0 million of the Company’s common stock from time-to-time in “at-the-market” offerings (the ATM Program). As of September 30, 2026, no sales had been made pursuant to the ATM Program. See note 12, Subsequent Events.

11. Segments

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (the CODM). The Company views its operations and manages its business asone operating and reportable segment, focused on developing therapeutics for patients with immune-mediated diseases. The Company’s CODM is itschief executive officer.

Segment profit or loss is measured as net loss presented on the unaudited condensed consolidated statements of operations and comprehensive loss. For the purpose of evaluating segment performance and allocating resources, the CODM reviews the Company’s financial information on a consolidated basis together with certain operating metrics and evaluates net loss against comparable prior periods and the Company’s annual operating plan. The measure of segment assets is reported on the unaudited condensed consolidated balance sheets as total consolidated assets.

In addition to the significant expense categories included within net loss presented on the unaudited condensed consolidated statements of operations and comprehensive loss, the following table sets forth disaggregated research and development expenses (in thousands):

1 Includes the upfront payment and the associated direct transaction costs incurred in connection with the Mabworks Agree ment for the nine months ended September 30, 2025.

2 Includes direct expenses related to the Company’s legacy product candidates ETX-123 and ETX-155.

12. Subsequent Events

The Company has evaluated subsequent events through the date on which these unaudited condensed consolidated financial statements were issued. In October 2026, the Company sold 1,010,000 shares of its common stock under the ATM Program at a price of $10.00 per share, resulting in gross proceeds of approximately $10.1 million.