SPRUCE BIOSCIENCES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Principal Activities

Description of Business

Spruce Biosciences, Inc. (“Spruce” and together with its consolidated subsidiary, the “Company”) is a late-stage biopharmaceutical company focused on developing and commercializing novel therapies for neurological disorders with significant unmet medical need. The Company is located in South San Francisco, California. Spruce was incorporated in the state of Delaware in April 2016 and its wholly-owned consolidated subsidiary, Adrenyx Biosciences, Inc. (“Adrenyx”) was incorporated in the state of Delaware in August 2026. Adrenyx was formed in connection with the Company’s separation of its CRHX-101 (formerly known as SPR202) program, as further described in Note 13.

August 2026 Private Placement

On August 7, 2026, the Company entered into a Stock Purchase Agreement with the National MPS Society and the Cure Sanfilippo Foundation (the “Purchasers”), pursuant to which the Company sold and issued to the Purchasers 121,203 shares of common stock in a private placement transaction. The purchase price was $45.38 per share of common stock. The total net proceeds to the Company, after deducting offering expenses payable by the Company, were $5.5 million. The proceeds will be used to partially fund the Company’s planned open-label, single-arm expanded access program to provide TA-ERT for the treatment of MPS IIIB in children.

April 2026 Public Offering

On April 22, 2026, the Company closed its previously announced underwritten public offering of 1,150,000 shares of its common stock at a public offering price of $50.00 per share and pre-funded warrants to purchase up to 50,000 shares of its common stock at a public offering price of $49.99 per pre-funded warrant (which equals the public offering price per share of common stock, less the $0.01 per share exercise price of each pre-funded warrant). In addition, the Company granted the underwriters a 30-day option to purchase up to 180,000 additional shares of common stock at the public offering price, less underwriting discounts and commissions, which was exercised in full. The net proceeds to the Company from the offering, after deducting underwriting discounts and commissions and offering expenses payable by the Company, were $64.4 million. The pre-funded warrants were fully exercised in April 2026.

Open Market Sales Agreement

In November 2025, the U.S. Securities and Exchange Commission (“SEC”) declared effective a registration statement on Form S-3 (the “Shelf Registration”), covering the sale of up to $300.0 million of the Company’s securities. Also, in March 2026, the Company entered into an Open Market Sales Agreement SM(the “Sales Agreement”) with Jefferies LLC (“Jefferies”) pursuant to which it may elect to issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $75.0 million under the Shelf Registration through Jefferies acting as the sales agent and/or principal. As of September 30, 2026, the Company hasnot issued any shares of common stock under the Sales Agreement.

Reverse Stock Split

Effective April 29, 2025, trading of the Company’s common stock on the Nasdaq Capital Market was suspended as a result of the Company’s ongoing failure to comply with the minimum bid price requirement under the Nasdaq Capital Market. As a result, the Company’s common stock began trading publicly on the over-the-counter market on April 29, 2025 under its symbol “SPRB”.

Subsequently on August 4, 2025, the Company effected a one-for-seventy-five (1:75) reverse stock split of its outstanding common stock (the “Reverse Stock Split”). The Company’s common stock began trading on the OTCQB on a split-adjusted basis on August 7, 2025 (the “Split Effective Date”) under the ticker symbol “SPRBD”. The Company’s common stock resumed trading on the Nasdaq Capital Market on September 15, 2025 under the ticker symbol“SPRB”.

At the effective time of the Reverse Stock Split, every 75 sharesof the Company’s issued and outstanding common stock were automatically converted into one issued and outstanding share of common stock, without any change in authorized common stock or par value per share. The Reverse Stock Split affected all shares of the Company’s common stock outstanding immediately prior to the effective time of the Reverse Stock Split, as well as the number of shares of common stock available for issuance under the Company’s equity incentive plans and employee stock purchase plan. In addition, the Reverse Stock Split effected a reduction in the number of shares of common stock issuable upon the exercise of warrants, stock options and restricted stock units outstanding immediately prior to the effectiveness of the Reverse Stock Split with a corresponding increase in the exercise price per share applicableto such warrants and stock options. No fractional shares were issued because of the Reverse Stock Split. Stockholders who were otherwise entitled to receive a fractional share received a cash payment in lieu thereof.

All of the outstanding common stock share numbers (including shares of common stock subject to the Company’s options), share prices, exercise prices and per share amounts contained in the financial statements have been retroactively adjusted in the financial statements to reflect this Reverse Stock Split for all periods presented.

Liquidity and Capital Resources

The Company has incurred significant losses and negative cash flows from operations. During the nine months ended September 30, 2026, the Company incurred a net loss of$52.5 million and used$44.6 million of cash in operations. As of September 30, 2026, the Company had an accumulated deficit of$341.7 million and does not expect positive cash flows from operations in the foreseeable future. The Company has funded its operations primarily through the issuance and sale of equity securities, debt and collaboration revenue.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which assumes the realization of assets and satisfaction of liabilities and commitments in the normal course of business. Without alternative financing or proceeds from other strategic alternatives, the Company believes that based on its current operating plan, its cash and cash equivalents of$87.7 million as of September 30, 2026 will be insufficient to fund its planned operations and debt obligations for at least 12 months following the issuance date of these condensed consolidated financial statements. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern for at least 12 months following the issuance date of these condensed consolidated financial statements. In addition, the Avenue Loan Agreement contains a subjective acceleration clause. If Avenue were to declare an event of default, including on the basis of a material adverse effect, the outstanding obligations under the Avenue Loans could become immediately due and payable.

The Company’s ability to continue as a going concern will require the Company to raise additional capital to fund the Company’s operations and there can be no assurance that additional financing will be available to the Company or that such financing, if available, will be available on terms acceptable to the Company. In order to meet these additional cash requirements, the Company may seek to sell one or more priority review vouchers, if received, out-license rights to develop and commercialize its investigational product candidates, sell additional equity or issue debt, convertible debt or other securities that may result in dilution to its stockholders. If the Company raises additional funds through the issuance of debt or convertible debt securities, these securities could have rights senior to those of its shares of common stock and could contain covenants that restrict its operations. Additional debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting the Company’s ability to take specific actions such as incurring debt, making capital expenditures or declaring dividends. The Company’s failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on its business, results of operations, financial condition and prospects.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC for interim reporting. As permitted under those rules and regulations, certain notes or other financial information normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The condensed consolidated financial statements include the accounts of Spruce and its wholly-owned subsidiary, Adrenyx. All intercompany balances and transactions have been eliminated in consolidation.

The condensed consolidated balance sheet as of September 30, 2026, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2026 and 2025, the condensed consolidated statement of stockholders’ equity for the three and nine months ended September 30, 2026 and 2025, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025 are unaudited. The interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal, recurring adjustments that are necessary to present fairly the Company’s results for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2025 is derived from the Company’s audited financial statements. The 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 year ending December 31, 2026, or for any other future annual or interim period.

These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 9, 2026 (“Annual Report”).

Prior year amounts relating to the change in fair value of warrant liability that were previously included in Interest and other income, net on the condensed consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2025 have been reclassified to conform to the current period presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. 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. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, accrued research and development expenses, warrant liability, stock-based compensation, and uncertain tax positions. The Company bases its estimates on its historical experience and on assumptions that it believes are reasonable; however, actual results could significantly differ from those estimates.

Risks and Uncertainties

Any product candidates developed by the Company will require approvals from the U.S. Food and Drug Administration or foreign regulatory agencies prior to commercial sales. There can be no assurance that the Company’s current and future product candidates will meet desired efficacy and safety requirements to obtain the necessary approvals. If approval is denied or delayed, it may have a material adverse impact on the Company’s business and its financial statements.

The Company is subject to a number of risks similar to other late-stage biopharmaceutical companies including, but not limited to, dependency on the clinical success of the Company’s product candidates, ability to obtain regulatory approval of its product candidates, the need for substantial additional financing to achieve its goals, uncertainty of broad adoption of its approved products, if any, by physicians and consumers, significant competition, untested manufacturing capabilities, and dependence on key individuals and sole source suppliers.

Global economic and business activities continue to face widespread macroeconomic and geopolitical uncertainties, including global trade disputes, labor shortages, declines in consumer confidence, inflation and monetary supply shifts, recession risks, potential disruptions from the ongoing wars in Ukraine and the Middle East and related sanctions, declines in economic growth, tariffs and related legal challenges, U.S. federal government shutdowns and the risk of future lapses in appropriations and uncertainty about economic stability. The Company continues to actively monitor the impact of these macroeconomic and geopolitical factors on its financial condition, liquidity, operations, and workforce. The extent of the impact of these factors on the Company’s operational and financial performance, including its ability to execute its business strategies and initiatives in the expected time frame, will depend on future developments, which are uncertain and cannot be predicted; however, any continued or renewed disruption resulting from these factors could negatively impact the Company’s business.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash and cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company is exposed to credit risk in the event of default by the financial institutions holding its cash and cash equivalents to the extent recorded in the condensed consolidated balance sheets.

Segment Reporting

The Company operates and manages its business asone reportable and operating segment, which is the business of developing and commercializing novel therapies for neurological disorders with significant unmet medical need. The Company’s chief executive officer, who is the chief operating decision maker (“CODM”), reviews financial information on an aggregate basis for allocating and evaluating financial performance. All long-lived assets are maintained in the United States of America.

The CODM assesses performance and decides how to allocate resources based on net loss. Net loss is used to monitor budget versus actual results. The measure of segment net loss and segment expenses is reported on the condensed consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the condensed consolidated balance sheet as total assets.

Significant Accounting Policies

There have been no significant changes to the significant accounting policies during the nine months ended September 30, 2026, as compared to the significant accounting policies described in the Annual Report.

Recent Accounting Pronouncements - Not Yet Adopted

In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses(“ASU 2024-03”), which requires disaggregated information about certain income statement expense line items on an annual and interim basis. ASU

2024-03 is effective for annual periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and can be applied prospectively or retrospectively. The Company is evaluating the impact of the adoption of this standard on the Company’s financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”), which intends to improve the navigability of the guidance in ASC 270 and clarify the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements. ASU 2025-11 is effective for annual periods beginning after December 15, 2027, and interim periods within those annual periods, with early adoption permitted. The Company expects that the adoption of ASU 2025-11 will not have a material impact on its financial statements and related disclosures.

In December 2025, the FASB issued Accounting Standards Update 2025-12, Codification Improvements (“ASU 2025-12”), which provides narrow-scope amendments to clarify, correct errors, and improve the consistency of various topics within the Accounting Standards Codification. The update addresses several technical issues, including refining diluted earnings per share calculations during loss periods. ASU 2025-12 is effective for annual periods beginning after December 15, 2026, and interim periods within those annual periods, with early adoption permitted. The Company is evaluating the impact of the adoption of this standard on the Company’s financial statements and related disclosures.

3. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurement establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.

The Company determined the fair value of financial assets and liabilities using the fair value hierarchy that describes three levels of inputs that may be used to measure fair value, as follows:

Level 1 — Quoted prices in active markets for identical assets and liabilities;

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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 classifies money market funds as Level 1 instruments as the Company uses quoted prices in active markets for identical assets to determine the fair value.

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

The Company didnot have any financial liabilities recorded at fair value as of December 31, 2025.

Debt

As of September 30, 2026, the Company estimated the fair value of the Avenue Loans (see Note 6) to be$12.0 million, based on Level 3 inputs, compared to a carrying value of$7.8 million. Although the Avenue Loans bear interest at a variable rate based in part on the prime rate, the 12.25% interest rate floor applied as of September 30, 2026.

Warrant and Conversion Option Liabilities

As of September 30, 2026, the Company classified its warrant liability as a Level 2 instrument as it was valued using the Black-Scholes option-pricing model using observable inputs. See Note 6 “Debt” for further information.

4. Balance Sheet Components

Accrued Expenses and Other Current Liabilities

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

Accrued research and development expenses were primarily related to manufacturing and clinical development.

5. Leases

The Company leases space under a non-cancelable operating lease, which requires the Company to pay base rent, real estate taxes, insurance, general repairs, and maintenance. In December 2022, the Company entered into a non-cancelable operating lease for approximately 6,500 square feet of office space in South San Francisco, California, which commenced in December 2022 and expires in February 2028 (the “South San Francisco Lease”). The Company has an option to extend the lease term of the South San Francisco Lease for an additional three years which has not been included in the lease term as it is not reasonably certain that the Company will exercise this option.

6. Debt

Avenue Loan

On January 7, 2026 (the “Avenue Closing Date”), the Company entered into a Loan and Security Agreement (the “Avenue Loan and Security Agreement”) and a Supplement to the Loan and Security Agreement (together with the Avenue Loan and Security Agreement, the “Avenue Loan Agreement”), with Avenue Capital Management II, L.P., as administrative agent and collateral agent (the “Agent”) and Avenue Venture Opportunities Fund II, L.P., as lender (the “Lender”, together with the Agent, “Avenue”).

The Avenue Loan Agreement makes available to the Company term loans in an aggregate principal amount of up to $50.0 million with (i) $15.0 million funded within 5 business days after the Avenue Closing Date (“Tranche 1”), (ii) up to $10.0 million to be made available to the Company between March 1, 2026 and September 30, 2026, subject to, among other things, the Company’s achievement of a key regulatory milestone related to the Company’s development of TA-ERT for the treatment of Sanfilippo Syndrome Type B (“MPS IIIB”) (“Tranche 2”) and (iii) up to $15.0 million to be made available to the Company between September 1, 2026 and March 31, 2027, subject to, among other things, the Company’s achievement of an additional key regulatory milestone with respect to the Company’s development of TA-ERT for the treatment of MPS IIIB (“Tranche 3”). The Lender may make additional term loans of up to an additional $10.0 million (the “Discretionary Tranche 4” and collectively with Tranche 1, Tranche 2 and Tranche 3, the “Avenue Loans”), to be funded between October 1, 2027 and June 30, 2028, subject to, among other things, (i) the Company’s achievement of a certain commercial milestone and (ii) the mutual written agreement of the Company and the Lender (upon the Lender’s investment committee approval). The Avenue Loans bear interest at an annual rate equal to the greater of (x) the sum of 5.25% plus the prime rate as reported in The Wall Street Journal and (y)12.25%. The Avenue Loans are secured by a lien uponand security interest in all of the Company’s assets, including intellectual property, subject to agreed exceptions. The maturity date of the Avenue Loans is July 1, 2029 (the “Avenue Maturity Date”). The Avenue Loan Agreement does not contain any minimum cash requirement or other financial covenants. As of September 30, 2026, the stated interest rate of the Avenue Loans was 12.25%. As of September 30, 2026, no amounts had been drawn under Tranche 2, and the original availability period for Tranche 2 expired on September 30, 2026. In November 2026, the Company amended the Avenue Loan Agreement to, among other things, increase and extend the availability of Tranche 2 and amend the terms of Tranche 3 (see Note 13).

The Company will make interest only payments on the Avenue Loans until the 12-month anniversary of the Avenue Closing Date, subject to (i) a 6-month extension, so long as at least $5.0 million from Tranche 2 has been funded and (ii) an additional 12-month extension if the Company achieves the Tranche 3 milestone. The Avenue Loans principal is repayable in equal monthly installments from the end of interest only period to the Avenue Maturity Date. Because no portion of Tranche 2 was funded as of September 30, 2026, the 6-month extension of the interest-only period under the original terms of the Avenue Loan Agreement was not available as of that date. Pursuant to the amendment described in Note 13, the interest-only period was extended through March 31, 2027, and, unless the interest-only period is further extended, monthly principal payments will commence in April 2027.

The Company may, at its option at any time, prepay the Avenue Loans in their entirety by paying the then-outstanding principal balance and all accrued and unpaid interest on the Avenue Loans, subject to a prepayment fee equal to (i)3.0% of the principal amount outstanding if the prepayment occurs on or prior to the first anniversary following the Avenue Closing Date, (ii)2.0% of the principal amount outstanding if the prepayment occurs after the first anniversary following the Avenue Closing Date, but on or prior to the second anniversary following the Avenue Closing Date, and (iii)1.0% of the principal amount outstanding if the prepayment occurs after the second anniversary following the Avenue Closing Date. The Company will pay a final payment of 4.0% of the aggregate commitment amounts for Tranche 1, Tranche 2 and Tranche 3, which shall be increased to include the commitment amount of Discretionary Tranche 4 upon the funding of such tranche, on the earlier of (x) the Avenue Maturity Date and (y) the date that the Company prepays all of the outstanding principal amount of the Avenue Loans in full (“Avenue Final Payment”). On the Avenue Closing Date, the Company paid to the Lender a commitment fee of $0.4 million.

The Avenue Loan Agreement contains customary representations, warranties and covenants, including covenants by the Company limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes. The Avenue Loan Agreement provides for events of default customary for term loans of this type, including but not limited to non-payment, breaches or defaults in the performance of covenants, insolvency, bankruptcy and the occurrence of a material adverse effect on the Company. After the occurrence of an event of default, the Agent may (i) accelerate payment of all obligations, impose an increased rate of interest, and terminate the Lender’s commitments under the Avenue Loan Agreement and (ii) exercise any other right or remedy provided by contract or applicable law. As of September 30, 2026, the Company was in compliance with all covenants under the Avenue Loan Agreement.

The Avenue Loan Agreement includes a subjective acceleration clause under which the Agent may declare an event of default upon the occurrence of circumstances that could reasonably be expected to have a material adverse effect, as defined in the agreement. As of the issuance date of these condensed consolidated financial statements, Avenue has not declared an event of default, and the Company has determined that acceleration under this provision is not probable. Accordingly, the Avenue Loans continue to be classified based on their scheduled repayment terms. If Avenue were to determine that a material adverse effect has occurred, all outstanding obligations could become immediately due and payable.

Pursuant to the Avenue Loan Agreement, following the filing of the Company’s annual report on Form 10-K for the fiscal year ending December 31, 2025 which occurred on March 9, 2026, the Lender has the right to convert up to $4.0 million of the outstanding principal of the Avenue Loans (the “Avenue Conversion Option”) at a price of $60.00 per share, subject to certain terms and conditions, including beneficial ownership limitations. In addition, subject to applicable law, the Lender had the right to participate in certain equity financing transactions of the Company in an aggregate amount of up to $1.0 million on the same terms, conditions and pricing offered by the Company to other investors participating in such financing transaction (such right, the “Participation Right”). The Participation Right terminated in April 2026.

At issuance of the Avenue Loans, the Company recorded the debt net of debt discount and costs which included $7.6 million for the grant date fair value of the Avenue Warrant and Avenue Conversion Option (discussed below), Avenue Final Payment of $1.6 million and issuance costs of $1.2 million.

As of September 30, 2026, the carrying value of the Avenue Loans was$7.8 million, consisting of the outstanding principal under Tranche 1 of$15.0 million, plus the Avenue Final Payment of $1.6 million, less unamortized debt discount and costs of$8.8 million, which are being amortized using the effective interest method over the life of the Avenue Loans.

For the three and nine months ended September 30, 2026, interest expense on the Avenue Loans was $1.2 million and $3.0 million, respectively, consisting of contractual interest of $0.5 million and $1.4 million and amortization of debt discount and issuance costs of $0.7 million and $1.6 million.

As of September 30, 2026, future payments of principal and interest of the Avenue Loans are as follows (in thousands):

Avenue Warrant

On March 9, 2026, in connection with the Avenue Loans, the Company issued to the Lender a warrant (the “Avenue Warrant”) to purchase up to $3.2 million worth of shares of the Company’s common stock. Prior to the issuance of the Avenue Warrant, the Lender was entitled to receive a payment of $6.4 million in the event a change of control had occurred prior to the issuance of the Avenue Warrant (the “Success Fee”). The obligation to pay the Lender the Success Fee terminated upon the issuance of the Avenue Warrant. In November 2026, the Company amended the Avenue Warrant to increase the number of shares of the Company’s common stock issuable pursuant to the Avenue Warrant by 5,000 shares. The Avenue Warrant will expire on March 31, 2031 (the “Avenue Warrant Expiration Date”) and has an exercise price equal to $50.00 per share, provided that any exercise of such Avenue Warrant is subject to certain beneficial ownership limitations. In addition, upon a change of control, the Lender is entitled to receive the shares of the Company’s common stock underlying the Avenue Warrant without payment of the exercise price.

The Lender may exercise the Avenue Warrant at any time, or from time to time up to and including the Avenue Warrant Expiration Date, by making a cash payment equal to the exercise price multiplied by the quantity of shares. The Lender may also exercise the Avenue Warrant on a cashless basis by receiving a net number of shares calculated pursuant to the formula set forth in the Avenue Warrant. The Avenue Warrant is subject to anti-dilution adjustments for stock dividends, stock splits, and reverse stock splits.

Avenue Warrant Liability

Although the Avenue Warrant was not legally issued until March 9, 2026 (the “Avenue Warrant Issue Date”), the Avenue Warrant was considered issued and outstanding as of the Avenue Closing Date for accounting purposes. The Avenue Warrant met the criteria for a derivative classification under ASC 815. As of the Avenue Closing Date, the Avenue Warrant did not have a fixed number of shares to be issued and therefore did not qualify for equity classification and was accounted for as a derivative liability at an initial fair value of $3.8 million using a Monte Carlo simulation model, with changes in fair value recognized on the condensed consolidated statements of operations and comprehensive loss.

Upon legal issuance of the Avenue Warrant on March 9, 2026, the shares into which the Avenue Warrant will be issued became fixed and therefore the Company reassessed its accounting treatment under ASC 815-40-15-7 using the prescribed two-step analysis. The Company concluded that Section 4.3 of the Avenue Warrant, which provides for automatic exchange of the Avenue Warrant for a fixed number of shares without payment of the exercise price upon a change of control, precludes the Avenue Warrant from being considered indexed to the Company’s own stock under Step 2 of ASC 815-40-15-7C through 7E. As such, the Avenue Warrant remains a derivative liability and was remeasured to fair value with changes in fair value recognized on the condensed consolidated statements of operations and comprehensive loss.

Following the April 2026 Public Offering (see Note 1), the valuation method for the Avenue Warrant was changed from the Monte Carlo simulation model to the Black-Scholes option-pricing model. The Monte Carlo simulation model previously incorporated uncertainty regarding the exercise price and number of shares issuable under a financing-related reset provision. Upon completion of the April 2026 Public Offering, that contingency was resolved, establishing an exercise price of $50.00 per share and 64,000 shares issuable upon exercise. Given the resolution of this contingency and the Company’s assessment that the remaining contingent settlement provisions did not materially affect fair value, the Company determined that the Black-Scholes option-pricing model appropriately reflected the Avenue Warrant’s remaining terms and market participant assumptions.

Avenue Conversion Option

As discussed above, the Avenue Conversion Option allows the Lender to convert up to $4.0 million of the outstanding principal of the Avenue Loans at a price of $60.00 pershare. At inception on the Avenue Closing Date, this feature was initially accounted for asan embedded derivative liability due to variable settlement terms at an initial fair value of $3.7 million using a Monte Carlo simulation model, with changes in fair value recognized on the condensed consolidated statements of operations and comprehensive loss.

Upon legal issuance of the Avenue Warrant on March 9, 2026, the Company reassessed its accounting treatment under ASC 815-40-15-7 using the prescribed two-step analysis and concluded that the Avenue Conversion Option qualified for equity classification because the settlement terms became fixed and the Avenue Conversion Option satisfied both the indexation and classification criteria. As such, the derivative liability was remeasured to fair value of $3.7 million and reclassified to additional paid-in capital, with no further remeasurement required thereafter.

The Avenue Warrant and Avenue Conversion Option were measured using a Monte Carlo simulation model at the grant and issue dates and the Avenue Warrant was measured using the Black-Scholes option-pricing model at September 30, 2026 with the following inputs as of the periods noted:

The following table provides a roll forward of the aggregate fair value of the Company’s warrant and conversion option liability (in thousands):

As of September 30, 2026,64,000 shares of common stock remain issuable under the Avenue Warrant at an exercise price of $50.00 and the Avenue Conversion Option, under which up to 66,667 shares of common stock are issuable, hasnot been exercised. Subsequently in November 2026, the shares of common stock issuable under the Avenue Warrant increased by 5,000 shares (see Note 13).

7. License Agreements

BioMarin Pharmaceutical, Inc.

On October 4, 2024, the Company entered into that certain Asset Purchase Agreement (the “Allievex Purchase Agreement”) with AVX (ABC), LLC, a Delaware limited liability company, in its sole and limited capacity as the assignee for the benefit of creditors of Allievex Corporation (“Allievex”). Pursuant to the Allievex Purchase Agreement, the Company acquired all intellectual property and inventory relating to Allievex’s product candidates and that certain Exclusive License Agreement, by and between BioMarin Pharmaceutical Inc. (“BioMarin”) and Allievex, dated October 22, 2019 (the “BioMarin License Agreement”).

As consideration, the Company paid $5.0 million to Allievex in November 2024. The Company also assumed certain liabilities of Allievex of $7.8 million, which have been fully paid as of September 30, 2026. The Company also recorded an estimated receivable of $2.6 million in other current assets on the balance sheet related to the completed Allievex bankruptcy proceedings which was fully collected by the Company in January 2026.

The Company also assumed the obligations of Allievex to pay BioMarin up to $25.5 million for the first MPS IIIB product and up to an aggregate of $100.0 million per licensed product upon the achievement of certain sales milestones. In addition, the Company is required to pay to BioMarin certain high-single digit to low-double digit tiered royalties on aggregate annual net sales of licensed MPS IIIB products during the applicable royalty term, subject to certain customary reductions and floors. No amounts were paid by the Company to BioMarin nor were any due as of September 30, 2026.

The Company may terminate the BioMarin License Agreement at any time for convenience upon prior written notice provided within a specified period of time. BioMarin may terminate the BioMarin License Agreement upon written notice if the Company (i) challenges the validity, enforceability or scope of any of the patents licensed by the Company under the BioMarin License Agreement, subject to certain conditions, or (ii) ceases all material research and development activity for any licensed product for a specified period of time, subject to certain exceptions. Either the Company or BioMarin may also terminate the BioMarin License Agreement (i) in the event the other party shall have materially breached its obligations thereunder and such default shall have continued for a specified period after written notice thereof or (ii) upon the bankruptcy or insolvency of the other party.

HBM Alpha Therapeutics, Inc.

On January 15, 2025, the Company entered into a collaboration and license agreement (the “HBM License Agreement”) with HBM Alpha Therapeutics, Inc. (“HBM”). Under the terms of the HBM License Agreement, HBM granted the Company an exclusive (outside of mainland China, Taiwan, Hong Kong and Macau), royalty-bearing and sublicensable license to certain technology, patent rights, manufacturing rights, know-how, and proprietary materials relating to CRHX-101, an anti-corticotropin-releasing hormone monoclonal antibody (“CRHX-101”).

As consideration, the Company made a one-time upfront payment to HBM of $5.0 million in February 2025. Additionally, in January 2025, the Company issued pre-funded warrants to HBM and its affiliates that in total were to be equal to 4.99% of the Company’s outstanding common stock as of the date of exercise of such pre-funded warrants. In June 2025, the Company amended the pre-funded warrants to extend the exercise period to December 2025. In December 2025, these pre-funded warrants were fully exercised.

The Company concluded that the rights acquired under the HBM License Agreement have no alternative future use. Therefore, the consideration paid of $5.0 million, along with the initial fair value of the pre-funded warrants issued of $0.7 million, was recognized as acquired in-process research and development expense, which was reported as a component of research and development expense for the nine months ended September 30, 2025.

The Company is also obligated to pay HBM up to an aggregate of $390.0 million upon the achievement of certain development, regulatory, and sales milestones. In addition, the Company is required to pay to HBM certain mid to high-single digit tiered royalties on aggregate annual net sales of licensed products during the applicable royalty term, subject to certain customary reductions.

The Company may terminate the HBM License Agreement on a licensed product-by-licensed product basis or in its entirety at any time for convenience upon prior written notice provided within a specified period of time. Either the Company or HBM may also terminate the HBM License Agreement (i) in the event the other party shall have materially breached its obligations thereunder and such default shall have continued for a specified period after written notice thereof or (ii) upon the bankruptcy or insolvency of the other party. HBM may terminate the HBM License Agreement upon prior written notice if the Company (i) ceases all development or commercialization activities for a specified period of time, subject to certain exceptions, or (ii) challenges the validity, enforceability or scope of any of the patents licensed by the Company to HBM under the HBM License Agreement, subject to certain conditions.

In connection with the Separation and planned Distribution described in Note 13, the Company assigned the HBM License Agreement to Adrenyx.

8. Commitments and Contingencies

The Company’s industry is characterized by frequent claims and litigation, including claims regarding intellectual property. As a result, the Company may be subject to various legal proceedings from time to time. The results of any future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. As of September 30, 2026, the Company was not subject to any material legal proceedings and management is not aware of any pending or threatened litigation that, individually or in the aggregate, could have a material adverse effect on the Company’s business, financial condition or results of operations.

The Company enters into contracts in the normal course of business with third-party contract manufacturing organizations and CROs for clinical trials, nonclinical studies, drug substance and product manufacturing and other services for operating purposes. These contracts are generally cancelable by the Company upon prior written notice after a certain period, except for certain contracts with contract manufacturing organizations containing minimum purchase obligations. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of the Company’s service providers, up to the date of cancellation. As of September 30, 2026, total noncancelable obligations under these arrangements were $22.1 million.

9. Capital Structure

Common Stock

As of September 30, 2026 and December 31, 2025, the Company was authorized to issue 200,000,000 shares of common stock $0.0001 par value per share. Holders of common stock are entitled to dividends if and when declared by the board of directors of the Company. The holder of each share of common stock is entitled toone vote. As of September 30, 2026, no dividends were declared.

Common stock reserved for future issuance, on an as converted basis, consisted of the following:

10. Stock-Based Compensation Expense

The following table summarizes the components of stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations and comprehensive loss during thethree and nine months ended September 30, 2026 and 2025 (in thousands):

Restricted Stock Units (“RSUs”)

During the nine months ended September 30, 2026, the Company granted 103,550 RSUs with a weighted-average grant date fair value of $67.12 per unit, of which 36,900 RSUs are subject to performance-based vesting conditions related to the satisfaction ofa regulatory milestone. As of September 30, 2026, the Company had 38,920 RSUs outstanding subject to performance-based vesting conditions, of which none are considered probable of achievement.

11. Net Loss Per Share

The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share amounts):

Weighted-average shares of common stock outstanding during the periods presented include any outstanding pre-funded warrants. Basic net loss per share was the same as diluted net loss per share for all periods as the inclusion of potentially dilutive securities would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations were as follows:

12. Related Party Transactions

Effective December 20, 2024, Kirk Ways, M.D., a member of the board of directors, began serving as the Company’s interim Chief Medical Officer pursuant to a consulting agreement and served in such role until July 27, 2026, when Adrian Quartel, M.D., FFPM, was appointed as the Company’s Chief Medical Officer. Following such appointment, Dr. Ways continued to provide consulting services to the Company. During the nine months ended September 30, 2026 and 2025, the Company recognized compensation expense of $0.9 million and $0.3 million, respectively, related to services provided by Dr. Ways, which is included in research and development expenses on the condensed consolidated statement of operations and comprehensive loss. As of September 30, 2026, the Company accrued compensation expense of $0.1 million related to such services, which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheet.

13. Subsequent Events

The Company has evaluated subsequent events through the date on which these condensed consolidated financial statements were issued.

Separation and Distribution

On November 6, 2026, the Company’s board of directors approved a plan to separate and contribute the Company’s CRHX-101 program into Adrenyx (the “Separation”). Also on November 6, 2026, the Company and Adrenyx entered into a series of agreements, including a separation and distribution agreement (the “Separation Agreement”) and a transition services agreement (the “Transition Services Agreement”). Pursuant to the Separation Agreement, among other things, the Company contributed to Adrenyx certain assets and liabilities relating to the CRHX-101 program as part of the Separation, including assignment of the HBM License Agreement. The Separation Agreement sets forth the conditions to, and the procedures for effecting, the distribution of all of the outstanding shares of Adrenyx common stock to the Company’s stockholders on a pro rata basis (the “Distribution”), subject to approval by the Company’s board of directors.

The Company will provide certain services to Adrenyx for a period of up to 12 months following the Distribution, subject to extension, compensated by Adrenyx as provided in the Transition Services Agreement.

Approval by the Company’s stockholders is not required as a condition to the consummation of the Distribution and there can be no assurance that the Distribution will be completed on the anticipated timeline, on the anticipated terms or at all.

Adrenyx’s Secured Convertible Notes

On November 6, 2026, Adrenyx entered into a secured convertible note purchase agreement (the “Note Purchase Agreement”) with a leading institutional biotechnology investor, purs uant to which Adrenyx may issue secured convertible promissory notes in an aggregate principal amount of up to $10.0 million, of which $5.0 million in aggregate principal amount was issued at the initial closing (the “Initial Adrenyx Notes”). The Initial Adrenyx Notes bear cash interest at 6% per annum, mature on the twelve-month anniversary of the initial closing and are automatically convertible into Conversion Securities (as defined in the Note Purchase Agreement, and which may include shares of Adrenyx’s common stock or other securities)upon the closing of a qualified equity financing raising aggregate gross proceeds of $37.5 million to investors, at a conversion price equal to 90% of the per-unit price issued to investors in such financing, or certain other financings of Adrenyx. Subjectto certain terms and conditions set forth in the Note

Purchase Agreement, including consent of such investor, Adrenyx may issue up to an additional $5.0 million ofsecured convertible promissory notes under the Note Purchase Agreement on the same terms as the Initial Adrenyx Notes (collectively, the “Adrenyx Notes”). Adrenyx is required to use the proceeds of the Adrenyx Notes to develop and commercialize the CRHX-101 program and for its other general corporate purposes, and the Company is not permitted to use any such proceeds to fund its own operations. The Adrenyx Notes are secured by substantially all assets of Adrenyx. The Adrenyx Notes are not secured by any assets of the Company or guaranteed by the Company. The Note Purchase Agreement contains customary negative covenants, including restrictions on the incurrence of additional indebtedness, the granting of additional liens, the payment of dividends and the consummation of certain transactions, in each case without the prior written consent of the holders of a majority-in-interest of the aggregate principal amount of the Adrenyx Notes. The Note Purchase Agreement also includes certain customary events of default, including payment defaults, breach of covenants and certain insolvency events of Adrenyx. Upon the occurrence of an event of default, the holders of the Adrenyx Notes may accelerate the outstanding amounts thereunder and the collateral agent may enforce its rights against the collateral.

On November 6, 2026, the Company entered into an amendment to the Avenue Loan Agreement (the “Avenue Amendment”), which, among other things, (i) increased the amount available under Tranche 2 to up to $15.0 million, which may be drawn in a minimum amount of $5.0 million and in increments of $2.5 million between January 1, 2027 and March 31, 2027, subject to the satisfaction of certain conditions and to earlier expiration in certain circumstances; (ii) amended Tranche 3 to be available between July 1, 2027 and December 31, 2027, made Tranche 3 discretionary and subject to the approval of the Lender’s investment committee at the time of any draw, and provided that the amount of Tranche 3 will be reduced by the amount of any Tranche 2 borrowings in excess of $10.0 million, such that the aggregate commitment amount under Tranche 1, Tranche 2 and Tranche 3 remains unchanged; and (iii) extended the interest-only period through March 31, 2027 and provided that the interest-only period may be further extended through October 31, 2027 (an interest-only period of 21 months, compared to 18 months under the original terms of the Avenue Loan Agreement) and, thereafter, through October 31, 2028 (an interest-only period of 33 months), in each case subject to the satisfaction of certain conditions. In connection with the Avenue Amendment, which also included Avenue’s consent to the Separation, including the release of Avenue’s lien on the assets contributed to Adrenyx, the Company amended the Avenue Warrant to increase the number of shares of common stock issuable thereunder by 5,000 shares, with no change to the exercise price of $50.00 per share. Also in connection with the Avenue Amendment, Adrenyx issued a warrant to Avenue for 69,000 shares of Adrenyx common stock (the “Adrenyx Avenue Warrant”) at an exercise price of the lower of $17.53 or the lowest effective price per share of any equity offering of Adrenyx’s common stock after the warrant’s issuance and prior to June 30, 2027.