Valion Bio, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts are as indicated)

Valion Bio, Inc. (the "Company”), formerly known as Tivic Health Systems, Inc., was incorporated in the state of California on* September 22, 2016.In June 2021,the Company was reincorporated as a Delaware corporation and, in November 2021,the Company completed its initial public offering. In February 2025,the Company acquired a worldwide exclusive license from Statera Biopharma, Inc. ("Statera”) to the late-stage toll-like receptor5* agonist Entolimod for the treatment of Acute Radiation Syndrome ("ARS”). At the same time, the Company acquired an exclusive option to licensefive additional indications and clinical use cases for Entolimod and its immune-optimized derivative, Entolasta with buy-out rights to enable use across all indications. In* March 2025,the Company exercised its option to license Entolimod and Entolasta for the treatment of neutropenia,one of the indications covered by the Statera license. With its entrance into the biopharmaceutical market in early2025,* the Company became a late-stage prescription therapeutics company harnessing the power of the immune system to improve clinical outcomes and save lives. In* December 2025,through a newly formed wholly owned subsidiary, Velocity Bioworks, Inc. ("VBI") the Company acquired all personal property and assets (collectively, the "Acquired Assets") but assumedno* liabilities in respect to the period prior to the transaction, of Scorpius Holdings, Inc. VBI is a contract development and manufacturing organization ("CDMO") and will provide services to support Valion's development and commercialization of Entolimod as well as contract with other organizations. In* April 2026,*the Company changed its name from Tivic Health Systems, Inc. to Valion Bio, Inc. As used in this Report, unless the context otherwise requires, references to “we,” “us,” “our,” “Company,” “Valion,” and “Valion Bio” refer to Valion Bio, Inc, collectively with its subsidiary, on a consolidated basis.

The Company is headquartered in San Antonio, TX.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of* December 31, 2025*, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements as of* June 30, 2026*, and for thethree andsix months ended* June 30, 2026* and* June 30, 2025*, have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and include the financial position and results of operations of Valion Bio, Inc and its wholly-owned subsidiary, Velocity Bioworks, Inc. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all accounting entries and adjustments (including normal, recurring adjustments) considered necessary for a fair presentation of the consolidated financial position and the consolidated results of operations for the interim periods have been made. Operating results for thethree andsix months ended* June 30, 2026* arenot necessarily indicative of the results that* maybe expected for the fiscal year ending December 31, 2026*. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The accompanying condensed consolidated financial statements donot include any adjustment that might be necessary if the Company is unable to continue as a going concern.

Reclassification

Certain reclassifications have been made to the prior year's (and or prior period's) balance sheet, statement of operations and statement of cash flows to conform to the current year presentation.

Going Concern Uncertainty

During thesix months ended* June 30, 2026and2025*, the Company incurred a net loss of$13.3 million and $3.4 million, respectively. As of* June 30, 2026*, the Company had an accumulated deficit of$66.5 million. Cash and cash equivalents as of* June 30, 2026* were $2.1 million. During thesix months ended* June 30, 2026and2025*, the Company used cash for operations of $10.3 million and$2*.7* million, respectively. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern withinone year from the issuance date of the consolidated financial statements. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements donot include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern withinone year after the date the consolidated financial statements are issued.

We expect to incur significant expenses and operating losses for the foreseeable future as we continue the development of and seek regulatory approval for our product candidates. Future capital requirements will depend upon many factors, including, without limitation, progress with developing, manufacturing and marketing our product candidates; the time and costs involved in obtaining regulatory approvals for our product candidates; the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other proprietary rights; our ability to establish collaborative arrangements; completion of any strategic transactions; marketing activities and competing technological and market developments, including regulatory changes and overall economic conditions in our target markets. We will require substantial additional financing to fund clinical trials and operations, and to continue to execute our strategy. These activities will require significant uses of working capital. There can beno assurance that we will obtain regulatory approval of our product candidates or generate sufficient revenue and cash to achieve profitability.

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The Company recognizes it will need to raise additional capital to fund its planned operations, including to complete pre-clinical and clinical trials and, if regulatory approval is obtained, commercialize any future products. The Company* mayseek additional funds through equity or debt offerings and/or borrowings under notes payable, lines of credit or other sources. The Company doesnot* know whether additional financing will be available on commercially acceptable terms, or at all, when needed. If adequate funds arenot available or arenot available on commercially acceptable terms, the Company’s ability to fund its operations, support the growth of its business or otherwise respond to competitive pressures could be significantly delayed or limited, which could materially adversely affect its business, financial conditions, or results of operations.

Nasdaq Compliance

On* March 19, 2026,the Company received a notification letter from the Nasdaq Listing Qualifications Department of The Nasdaq Stock Market LLC ("Nasdaq”) notifying the Company that, because the closing bid price for the Company’s common stock was below$1.00* per share for at least30 consecutive business days, the Company isnot currently in compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule5550(a)(2) (the "Minimum Bid Price Requirement”).

The notification hasno immediate effect on the listing of the Company’s common stock on The Nasdaq Capital Market, and, therefore, the Company’s listing remains fully effective.

In accordance with Nasdaq Listing Rule5810(c)(3)(A), the Company has a period of180 calendar days from* March 19, 2026or until September 15, 2026,to regain compliance with the Minimum Bid Price Requirement. If at any time before September 15, 2026,the closing bid price of the Company’s common stock closes at or above$1.00* per share for a minimum of10 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the Minimum Bid Price Requirement, and the matter would be resolved. If the Company doesnot regain compliance during the compliance period ending on* September 15, 2026,then Nasdaq maygrant the Company asecond* 180 calendar day grace period to regain compliance, provided the Company (i) meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and (ii) the Company notifies Nasdaq of its intent to cure the deficiency.

The Company intends to continue actively monitoring the closing bid price for the Company’s common stock between now and* September 15, 2026,and will consider available options to resolve the deficiency and regain compliance with the Minimum Bid Price Requirement. If the Company doesnot* regain compliance within the allotted compliance period, including any extensions that* maybe granted by Nasdaq, Nasdaq will provide notice that the Company’s common stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel. There can beno* assurance that the Company will regain compliance with the Minimum Bid Price Requirement during the180-day compliance period, secure asecond period of180 days to regain compliance, or maintain compliance with the other Nasdaq listing requirements.

Basis of Consolidation

The consolidated financial statements include the assets, liabilities, revenue, and expenses of our wholly owned subsidiary, Velocity Bioworks, Inc. All intercompany balances and transactions have been eliminated upon consolidation. The consolidated financial statements include the operating results of Velocity Bioworks, Inc. from the date control was obtained.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual results could differ materially from those estimates. 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.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities ofthree months or less at date of purchase to be cash equivalents. As of* June 30, 2026* and* December 31, 2025*, cash equivalents include investments in our money market account and were $2.2 million and $12.2 million, respectively. Restricted cash as of* June**30,* 2026 represents cash collateral for an irrevocable standby letter of credit issued to TPB Merchants Ice LLC, the landlord forone of Velocity's facility leases. The standby letter of credit is $350 thousand and the bank has required us to maintain 105% of cash as collateral, or $368 thousand.

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Inventory, net

Inventories are stated at the lower of cost or net realizable value, with cost determined on afirst-in,first-out ("FIFO") basis. Inventories are reviewed periodically to identify slow-moving inventory based on anticipated sales activity. Inventory as of* June 30, 2026is comprised of raw materials, including bulk drug substance of Entolimod. The inventory was transferred to Valion as part of the license agreement entered into with Statera in February 2025,however, hadno* value assigned to it until it could be validated for purity and potency. Per the agreement with Statera (see Footnote9), upon validation of current inventory of materials for distribution and sales, the Company was required to pay Statera $750 thousand, which was assigned to inventory. There wasno inventory recorded as of* December 31, 2025.*

Deferred Offering Costs

The Company complies with the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”)340-10-S99-1. The Company capitalizes incremental legal, professional, accounting, and otherthird-party fees that are directly associated with an equity or debt offering, as other assets. As of* June 30, 2026* and* December 31, 2025*, the balance of deferred offering costs was $0.6 million and $0.1 million, respectively, and consisted of legal and accounting fees paid in connection with future Series B and Series C preferred stock issuances, the Tumim Equity Line of Credit, and other planned capital raises. Deferred offering costs are reclassified to additional paid in capital on a pro-rata basis when the Company completes offerings.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

Research and Development Expenses

Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, materials, supplies, depreciation on and maintenance of research equipment, the cost of services provided by outside contractors, and the allocable portions of facility costs, such as rent, utilities, insurance, repairs and maintenance, depreciation, and general support services. All costs associated with research and development are expensed as incurred unless there is an alternative future use.

Deemed Dividend

The Investor Warrants issued to the Investor in connection with the Tranched Financing contain a provision for the change in exercise price should the Company issue a new Investor Warrant in a subsequent Tranche Closing with an exercise price lower than the exercise price of the Investor Warrant issued earlier. The provision lowers the exercise price to the new Investor Warrant triggering the repricing feature and creates a deemed dividend. For purposes of calculating earnings per share for the period, the deemed dividend is added to the net loss for the period.

Segment Reporting

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker ("CODM") in deciding how to allocate resources and assess performance. The Company's CODM is the Chief Executive Officer, who reviews the Company's operations and manages thetwo operating segments: the biopharma group and the contract development and manufacturing organization.

Net Loss per Share

Basic earnings (loss) per share is computed using the weighted-average number of shares of common stock outstanding during the period adjusted to add back dividends (declared or cumulative undeclared) applicable to the Series B and Series C Preferred Stock. Diluted earnings (loss) per share is computed using the weighted-average number of shares of common stock and the dilutive effect of contingent shares outstanding during the period. Potentially dilutive contingent shares, which primarily consist of stock options issued to employees, directors and consultants, restricted stock units ("RSUs”), warrants issued tothird parties, all of which are accounted for as equity instruments, would be excluded from the diluted earnings per share calculation because their effect is anti-dilutive.

Basic and diluted net income (loss) per share attributable to common stockholders is presented in conformity with thetwo-class method required for participating securities such as our preferred stock. Under thetwo-class method, basic and diluted net income (loss) per share attributable to common stockholders is computed by dividing the basic and diluted net income (loss) attributable to common stockholders by the basic and diluted weighted-average number of shares of common stock outstanding during the period. Diluted net income per share attributable to common stockholders adjusts basic net income per share for the potentially dilutive impact of stock options, RSUs and warrants.

The treasury stock method is used to calculate the potentially dilutive effect of stock options and RSUs. The if-converted method is used to calculate the potentially dilutive effect of shares of the Series A, B, and C Preferred Stock. In both methods, diluted net income (loss) attributable to common stockholders and diluted weighted-average shares outstanding are adjusted to account for the impact of the assumed issuance of potential shares of common stock that are dilutive, subject to dilution sequencing rules.

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Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents. Cash and cash equivalents include a checking account and a money market account held atone national financial institution in the United States. At times, such deposits* maybe in excess of insured limits. Management believes that the financial institution at which the Company holds its deposits is financially sound, and accordingly, minimal credit risk exists with respect to the financial institution. The Company hasnot* experienced any losses on its deposits of cash and cash equivalents. As of* June**30,* 2026 and* December 31, 2025,*the Company had cash and cash equivalents balances exceeding FDIC insured limits by $2.1 million and $12.1 million, respectively.

The ongoing conflicts between Russia and Ukraine and the more recent conflict among the U.S, Israel, Hamas and Iran, certain other macroeconomic factors including tariffs, inflation, and rising interest rates, have contributed to economic uncertainty. Additionally, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and* may*in the future lead to market-wide liquidity problems. Furthermore, it is possible that U.S. policy changes, including planned or proposed budget cuts at the federal government level, could increase market volatility in the coming months. These factors, amongst other things, could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. We will continue to monitor material impacts on our business strategies and operating results.

Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the circumstances present. The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its operating right-of-use ("ROU”) assets and operating lease liabilities at the lease commencement date, and thereafter if modified. The lease term includes any renewal options that the Company is reasonably assured to exercise. The Company’s policy is tonot record leases with a lease term of12 months or less on its consolidated balance sheets.

The Company determines if an arrangement is a lease at inception and determines the classification of the lease, as either operating or finance, at commencement. The Company has various operating leases for its facilities. The leases have remaining lease terms ranging from 2.5 to 8.9 years. One lease agreement contains an option to renew for 5 years. The Company doesnot plan to renew. For short-term leases with expected terms of less than1 year, the Company doesnot recognize ROU assets or lease liabilities. The Company doesnot have any finance leases.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the rate implicit in the Company’s leases isnot readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The Company estimates the incremental borrowing rate to reflect the profile of secured borrowing over the expected term of the leases as of the lease commencement date.

The operating lease ROU asset also includes any lease payments made, and excludes lease incentives received, at or before lease commencement. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Recently Issued Accounting Pronouncements

In* November 2024,the FASB issued ASU2024*-03, Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic220*-40) - Disaggregation of Income Statement Expenses*. The guidance applies to all public business entities and becomes effective for annual periods beginning after* December 15, 2026,and interim periods beginning after December 15, 2027.Early adoption is permitted. The guidance requires improved disclosures about expenses, including the types of expenses in commonly presented expense captions (such as cost of sales, SG&A and research and development) which will allow investors to better understand the components of an entity's expenses. In January 2025,the FASB issued ASU2025*-01 to further clarify the effective date as thefirst annual reporting period beginning after* December 15, 2026,and interim periods within annual reporting periods beginning after December 15, 2027.We donot* believe that ASU2024-03 will have a material impact on our consolidated financial reporting.

In* December 2025,the FASB issued ASU2025*-12 -Codification Improvements. ASU2025-12 addresses suggestions received from stakeholders on the Accounting Standards Codification ("ASC" or "Codification”) and makes other incremental improvements to U.S. GAAP. The standard is effective for the Company’s Annual Report onForm10-K for the fiscal year ended* December 31, 2027,*and for interim periods within such year, with early adoption permitted. The Company is currently evaluating the impact of the update on the consolidated financial statements.

In* December 2025,the FASB issued ASU2025*-11 Interim Reporting (Topic270*): Narrow-Scope Improvements*. ASU2025-11 improves the guidance in Topic270 by improving the navigability of the required interim disclosures and clarifying when the guidance is applicable. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods. The standard is effective for the Company’s Annual Report on Form10-K for the fiscal year ended* December 31, 2028,*and for interim periods within such year, with early adoption permitted. The Company is currently evaluating the impact of the standard on the consolidated financial statements.

Management doesnot believe any other recently issued butnot yet effective accounting pronouncement, if adopted, would have a material effect on the Company’s present or future consolidated financial statements.

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On* November 12, 2025,after considering all reasonably available options and a broader strategic reassessment, the Company’s board of directors approved the wind down of the Company’s ClearUP business, which the Company substantially completed prior to the end of2025.* In connection with the wind down of the ClearUP business, the Company incurred approximately $347 thousand in charges during the year ended* December 31, 2025,which included $230 thousand for the write-off of inventory and $117 thousand for the write-off of property and equipment. We expect to incur additional related expenditures in the range of approximately $20 thousand to $50 thousand in20**26* for disposal costs on remaining finished goods. The estimates of the charges and costs that we expect to incur, and the timing thereof, are subject to a number of assumptions and actual results* maydiffer materially from those described above. In addition, we mayincur other charges or cash expendituresnot* currently contemplated due to unanticipated events that* mayoccur as a result of, or in connection with, the wind down of the ClearUP business. During thefirst* two months of2026 our sales platform remained open and ClearUP units continued to sell while we worked out logistics for shutting down the site. As all inventory had been written off in2025, our only costs in thefirst quarter related to shipping, storage and order fulfilment. During thesecond quarter of2026 we incurred approximately $40 thousand of costs related to refunds tothird-party resellers for their remaining unsold inventory.

Financial Information of Discontinued Operations

The following table summarizes the assets and liabilities classified as discontinued operations for each of the periods presented (in thousands):

Loss from discontinued operations, in the consolidated statements of operations, reflects the results of the ClearUP business and doesnot include any allocation of general corporate overhead expense or interest expense of the Company.

The following table summarizes the significant line items included in loss from discontinued operations, in the consolidated statements of operations (unaudited in thousands):

The following table summarizes significant non-cash operating items, and capital expenditures of discontinued operations included in the consolidated statements of cash flows (unaudited in thousands):

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Asset Purchase Transaction

On* December 9, 2025,Valion Bio, Inc., through a newly formed wholly owned subsidiary, Velocity Bioworks, Inc. entered into an Asset Purchase Agreement (the "APA”) and Secured Party Bill of Sale (the "Bill of Sale”) with3i,* LP ("3i”), in its capacity as collateral agent of Scorpius Holdings, Inc. ("Scorpius”) pursuant to which, VBI acquired all of personal property and assets (collectively, the "Acquired Assets"), but assumedno liabilities in respect to the period prior to the closing on* December 10, 2025,of Scorpius, in a public sale pursuant to Article9* of the Uniform Commercial Code. In* October**2025,as* a result of Scorpius’ default under certain secured notes and related security agreements,3i exercised its rights and remedies with respect to certain collateral of Scorpius and its affiliate guarantors, including the Acquired Assets, and determined to sell such collateral in a public auction pursuant to Article9, at which auction the Company submitted the winning bid. The Acquired Assets include, without limitation, equipment, contract rights, IT systems, software, files, records, documents, intellectual property, and goodwill related to Scorpius’ contract development and manufacturing organization ("CDMO”) business. Prior to the acquisition, Scorpius served as the primary U.S. manufacturer for the Company’s late-stageTLR5 agonist, Entolimod, for the treatment of acute radiation syndrome. As a result of VBI’s acquisition of the Acquired Assets, all manufacturing and related services previously provided by Scorpius to the Company through its CDMO business will be completed in-house and the Company intends to expand its business operations to provide similar services to other clients in the future.

Pursuant to the APA, as consideration for the Acquired Assets, the Company (on behalf of VBI) issued to3i a senior convertible note payable in the amount of $16,253,147 at the closing of the Acquisition. Consistent with customary practices in a sale under Article9, the APA doesnot contain representations, warranties, covenants or indemnities of the Collateral Agent, and the assets were sold "as is.”

The allocation of the purchase price to the estimated fair value of the assets acquired at the acquisition date is as follows (in thousands):

The Company accounted for the acquisition of Scorpius using the acquisition method of accounting in accordance with ASC805, Business Combinations. The purchase price has been allocated on a preliminary basis to the assets assumed based on management’s current estimates of their fair values as of the acquisition date of* December 10, 2025.Because the Company hasnot* yet completed the valuation analyses necessary to finalize the fair values of certain assets acquired, the purchase price allocation is considered provisional.

During the measurement period, which willnot exceedone year from the acquisition date, the Company will continue to obtain information to assist in completing the valuation analyses and expects to finalize the purchase price allocation as soon as practicable. Measurement-period adjustments, if any, will be recognized in the period in which the adjustments are determined, with a corresponding adjustment to goodwill, and the results of prior periods presented will be revised as if the accounting for the business combination had been completed as of the acquisition date, including related impacts on depreciation, amortization, and other income statement amounts, as required by ASC805.

The Company’s financial instruments consist of money market funds and a derivative liability. The following tables show the Company’s financial instruments' carrying value and fair value at* June 30, 2026* and* December 31, 2025* (in thousands):

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Cash equivalents -Cash equivalents of $2.2 million as of June 30, 2026 and $12.2 million as of* December 31, 2025*, consisted of money market funds. Money market funds are classified as Level1 of the fair value hierarchy because they are valued using quoted market prices in active markets. Of the$2.2 million of cash equivalents as of* June**30,* 2026, $368 thousand is classified as restricted cash on the balance sheet as it serves as collateral forone of the Company's facility leases.

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Recurring Fair Value Measurements

The Company’s derivative liability embedded in the Financing Agreement is measured at fair value using a probability-weighted discounted cash flow model and is classified as a Level3 liability of the fair value hierarchy due to the use of significant unobservable inputs. The liability is presented as an embedded derivative liability on the consolidated balance sheets and is subject to remeasurement to fair value at the end of each reporting period, with the change in fair value recognized as a component of other income (expense) in its consolidated statements of operations. The assumptions used in the discounted cash flow model include: (1) management's estimates of the probability and timing of future cash flows and related events; (2) the Company's risk-adjusted discount rate that includes a company-specific risk premium; and (3) the Company's cost of debt.

The following table provides a reconciliation for the opening and closing balance of the derivative liability for thesix months ended* June 30, 2026 (*in thousands):

The following table provides a reconciliation for the opening and closing balance of the derivative liability for the year ended* December 31, 2025 (*in thousands):

There have beenno changes to the valuation methodologies utilized by the Company during thesix months ended* June 30, 2026* compared to the year ended* December 31, 2025*. The Company evaluates transfers between levels at the end of each reporting period. There wereno transfers of financial instruments between levels during thesix months ended* June 30, 2026* and the year ended* December 31, 2025*.

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Microbial Building Lease

On* March 13, 2026,VBI entered into a Building Lease Agreement (the “Microbial Building Lease”) with TPB Merchants Ice LLC (“TPB”) to lease an approximately 8,042 square foot facility (the “Microbial Building”) located at1305* E. Houston St., San Antonio, TX78205 ("the Property"). The initial term of the Microbial Building Lease iseight years, unless earlier terminated by the parties pursuant to the terms thereof. VBI has (i) aone-time option to extend the lease term for an additional period offive years and (ii) the exclusive option to purchase the Microbial Building and the Property from TPB at any time during thefirst 24 months of the initial term for $12.5 million. In exchange for leasing the premises, VBI shall pay TPB a monthly base rent of approximately $22,605 for thefirst twelve months, or a total of $271,260, with annual dollar increases in later years of the lease term. The aggregate base rent over theeight-year lease term is approximately $5.34 million. The Microbial Building Lease provides that VBI will pay additional expenses to TPB related to VBI’s share of operating expenses, taxes and utilities related to the premises using ratable percentages set forth in the Microbial Building Lease.

Mammalian Building Lease

On* March 9, 2026,VBI entered into a Lease (the “Mammalian Building Lease”) with Merchants Ice II, LLC (“Merchants Ice II”) to lease an approximately 20,144 square foot facility located at the Property. The term of the Mammalian Building Lease is 102 months, effective January 1, 2026,unless earlier terminated by the parties pursuant to the terms thereof. In exchange for leasing the premises, VBI shall pay Merchants Ice II a monthly base rent of $55,030 for thefirst* twelve months, or a total of $660,357, with annual increases of approximately 3.0%. The aggregate base rent over the lease term is approximately $6.29 million. The Mammalian Building Lease provides that VBI will pay additional expenses to TPB related to VBI’s share of operating expenses, taxes and utilities related to the premises using ratable percentages set forth in the Mammalian Building Lease.

Office Sublease

On* March 13, 2026,VBI entered into a Sublease (the “Office Sublease” and together with the Microbial Building Lease and the Mammalian Building Lease, the “Facility Leases”) with Texas Research and Technology Foundation (“TRTF”) to sublease approximately 8,122 square feet of office space located at the Property, which Office Sublease was consented to by TPB, as landlord of the leased premises, and is subject to the terms of that certain Office Lease Agreement, dated June 1, 2024,*by and between TRTF and TPB. The term of the Office Sublease is 102 months, unless earlier terminated by the parties pursuant to the terms of the Office Sublease. This office will serve as the new principal executive office of the Company. In exchange for subleasing the premises, VBI shall pay TRTF a monthly base rent of $30,436, with annual increases of approximately 3.0%. The aggregate base rent over the lease term is approximately $3.9 million. The Office Sublease provides that VBI will pay additional expenses to TPB related to VBI’s share of operating expenses, taxes and utilities related to the premises using ratable percentages set forth in the Office Sublease.

Warehouse Lease

On* February 23, 2026,VBI entered into a Lease (the “Warehouse Lease”) with EastGroup Properties L.P. ("EastGroup") to lease approximately 22,262 square feet of warehouse space located on Wetmore Rd. in San Antonio, TX. The term of the Warehouse Lease is 35 months, effective February 1, 2026.In exchange for leasing the premises, VBI shall pay EastGroup a monthly base rent of approximately $21,069 for thefirst* ten months with escalations each year thereafter. The aggregate base rent over the35 month lease term is approximately $0.8 million. The Warehouse Lease provides that VBI will pay additional expenses related to VBI’s share of operating expenses, taxes and utilities related to the premises using ratable percentages set forth in the Warehouse Lease.

Facility Lease

We refer to thefour leases discussed above as our facility leases. The facility leases are accounted for in accordance with ASC842. During thefirst quarter of2026, we recorded a total of $10.3 million of right-of-use assets and related lease liabilities at lease inception. We used an incremental borrowing rate of 11%, which reflects the estimated borrowing rate for secured mortgages over the lease terms. The right-of-use assets are being amortized over each of the lease terms. Amortization of$0.4 millionwas recorded for thesix months ended* June30,* 2026. Total lease costs recorded for thesix months ended* June 30, 2026were$0.9 million and cash paid for leases during the same period were $0.7 million. There wereno* operating leases for thesix months ended* June30,* 2025.

The weighted-average remaining term of the leases is 7.72 years and the weighted-average discount rate is 11%.

Amounts recorded on the balance sheet related to the facility leases as of* June 30, 2026*are as follows (in thousands):

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Total lease costs recorded for thethree andsix months ended* June 30, 2026*are as follows (in thousands):

Future cash obligations with respect to thefour leases discussed above are as follows as of* June 30, 2026:*

Depreciation expense was $358 thousand and$362 thousand for thethree andsix months ended* June 30, 2026* , respectively. Depreciation expense was $1 thousand and $2 thousand for thethree andsix months ended* June 30, 2025,respectively. Assets acquired from Scorpius were placed in service April 1, 2026.*

On* February 11, 2025,the Company entered into an exclusive license agreement (the "License Agreement”) with Statera, pursuant to which the Company acquired (i) an exclusive worldwide license to the patented Toll-like Receptor5* ("TLR5”)agonist lead program of Statera known as Entolimod (the "Licensed Molecules”)as it relates to the ARS indication (the "Initial Indication”)and (ii)an exclusive option (the "Exclusive Option”) to acquire the exclusive worldwide license to additional indications, including lymphocyte exhaustion, immunosenescence, neutropenia and/or for use as a vaccine adjuvant (the "Subsequent Indications”) and to the optimizedTLR5 agonist follow-on program of Statera known as Entolasta.

Under the terms of the License Agreement, Statera granted the Company an exclusive worldwide license, with the right to grant and authorize sublicenses, under Statera’s patents, trademarks, know-how and other intellectual property, to develop, test, make, have made, use, sell, offer for sale, import and otherwise exploit the product Entolimod as it relates to the Initial Indication during the term of the License Agreement.

As consideration for the License Agreement, the Company agreed to pay Statera a license fee of $1.5 million, consisting of (i) $300 thousand in cash consideration and (ii) $1.2 million in stock consideration, as discussed further in Notes13 and14 below. As additional consideration for the License Agreement, the Company agreed to pay Statera certain royalty payments on net sales for the ARS indication as a single agent, and, if it exercises the Exclusive Option with respect to any Subsequent Indication, net sales for such Subsequent Indications, within certain royalty periods.

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The License Agreement further provides the Company with the Exclusive Option to expand the Initial Indications to include the treatment of the Subsequent Indications or to expand the use from a single agent to include uses as vaccine adjuvant, or several or all of them, at any time during the term of the License Agreement, and onone or more occasions, at its discretion. As part of exercise of the Exclusive Option, the license grant would be expanded to include uses of Entolasta, in addition to Entolimod, both for ARS and for the Subsequent Indications for which the Company has exercised its Exclusive Option.

In conjunction with the License Agreement, Statera additionally transferred to the Company the title to approximately fifteen kilograms (15kg) of frozen manufactured Entolimod bulk drug substance and bulk/finished drug product lots and associated quality records associated with their production and applicable verification records (the "Materials”). In connection with this acquisition of ownership of the Materials, the Company is negotiating a $1 per year lease with an affiliate of Statera for the proper care, storage and handling of the Materials. The Company determined that the fair value associated with the Entolimod lots and associated lease wasnot material to the transaction.

The License Agreement also includes a buyout provision (the "Buyout”) by which the Company maintains the right to acquire from Statera at any time all right, title and interest in and to all technology licensed or otherwise subject to the Exclusive Option under the License Agreement. Should the Company elect to invoke this buyout right, it must provide Statera with a buyout payment equal to (a) the lesser of (i) the aggregate amount of payments due to Statera for achievement of all milestone events (described below), less the amount of payments paid for the achievement ofone or more of such milestone events, and (ii)an amount negotiated in good faith and mutually agreed by the parties in writing as representing the risk adjusted net present value of the aggregate royalties that would have been payable absent such exercise; less (b) the amount of payments paid or payable by the Company to extinguish an existing lien on the licensed technology.

The Company evaluated the transaction for proper treatment as an acquisitions of assets or as a business combination. The Company determined the acquisition constituted an acquisition of assets instead of a business combination, as substantially all of the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets, and therefore, the acquisition wasnot considered a business combination. In transactions accounted for as acquisitions of assets,no goodwill is recorded and contingent consideration, such as payments upon achievement of various developmental, regulatory and commercial milestones, generally isnot recognized at the acquisition date. In an asset acquisition, upfront

payments allocated to in-process research and development ("IPRD”) projects at the acquisition date are expensed unless there is an alternative future use. In addition, product development milestones are expensed upon achievement. As the Company is recording the transaction as an asset acquisition under ASC805, the contingent payments will be recognized upon achievement and at that time will be expensed to in-process research and development, or capitalized, depending on the determination if there is alternative future use of the purchase. Transaction costs of approximately $243 thousand associated with the acquisition were capitalized as part of the acquisition.

The License Agreement obligates the Company to develop and commercialize the licensed products, at its own cost and expense, inclusive of licensed products with respect to any Subsequent Indications obtained upon exercise of an Exclusive Option. In the development and commercialization process, the Company is obligated to meet certain milestones, and must provide Statera with certain milestone payments, payable in either the form of cash or Company stock (at the sole discretion of the Company), upon accomplishing each milestone as outlined below.

Upon exercise of an Exclusive Option with respect toone or more Subsequent Indications, the following corresponding applicable milestones and milestone payments (all milestone payments, collectively, the “Milestone Payments”), payable in either cash or Company stock (at the sole discretion of the Company), become obligations of the Company as well:

Pursuant to the License Agreement, in the event that the Company exercises its Exclusive Option with respect toone or more Subsequent Indications, the Company* may*elect, in its sole discretion, to accelerate any of the Milestone Payments in advance of the milestone achievements.

On* March 28, 2025,the Company notified Statera of its election to exercise its Exclusive Option to acquire the exclusive worldwide license to the neutropenia indication for Entolimod under the License Agreement (the "Neutropenia Option”) and to accelerate thefirst* milestone payment of $500 thousand related to the neutropenia indication (the "Neutropenia Milestone Payment”), payable by the Company in connection with the filing of an IND and initiation of a Phase2 clinical study for neutropenia. The Company paid the $500 thousand Neutropenia Milestone Payment paid in Company stock, as discussed further in Notes13 and14 below, and was capitalized as licensed technology.

As a result of the Company’s exercise of the Neutropenia Option, the Company is obligated to develop and commercialize the expanded licensed products related to the neutropenia indication, at its own cost and expense, including to meet those milestones discussed above, and is obligated to pay the milestone payments, other than the Neutropenia Option, upon accomplishing each such milestone.

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On* June 18, 2025,the Company entered into an Amended and Restated Exclusive License Agreement (the "A&R License Agreement”) with Statera, which amended certain terms of the License Agreement to, amongst other things, (i) provide that the payment of royalties pursuant to the A&R License Agreement, if any, maybe made by the Company in either cash or securities of the Company, at the discretion of the Company; (ii) increase the approximate amount of the lien held by Avenue Venture Opportunities Fund, L.P. ("Avenue”) to up to $5.6 Million (the "Payoff Amount”); and (iii) provide that, other than the original license fee paid by the Company to Statera in connection with the closing of the license transaction in February 2025*and payment of the Neutropenia Milestone Payment, until such date that the Payoff Amount has been paid in full to Avenue, all subsequent payments due to Statera under the A&R License Agreement shall be paid by the Company as follows:20% of any such payments shall be paid to Statera and 80% of any such payments shall be paid directly to Avenue on behalf of Statera.

In thefirst quarter of2026, the Company validated the current inventory of materials for distribution and sales. Testing was performed on a sample of the materials acquired with the license and the samples tested passed purity and potency requirements. As such, we believe the bulk drug substance* maybe used for sale and distribution outside of the United States, in areas where CGMP isnot* required. Therefore, the Company capitalized $750 thousand of inventory and recorded a liability of $750 thousand which is included in accrued expenses on the balance sheet as of* June**30,* 2026. On* July 31, 2026,*the Company issued a total of

1,288 shares of its Series A Preferred Stock to Avenue and Statera in full settlement of the $750 thousand liability.

Lease

The Company hasfour leases for facilities used by VBI in San Antonio, Texas. Refer to Note7, Leases, for a full discussion of each of the leases and the total commitment by year for the facility leases as a whole.

Additionally, the Company signed aone-year lease for corporate office space in San Antonio, TX with an effective date of* March 16, 2026.*The lease calls for monthly base rent of $1,188 and will automatically renew for successiveone-year terms unless terminated by either party.

Exclusive License Agreement–* Statera BioPharma*

As discussed above in Note9, the Company is obligated to make certain payments to Statera pursuant to the A&R License Agreement, upon the achievement of certain commercialization milestones.

Shear Kershman

In* April 2026,the Company entered into a Product Development Agreement and Option to License Product and Intellectual Property (the "SKL Agreement") with Shear Kershman Labs, a Missouri corporation ("SKL"), pursuant to which the Company engaged SKL to develop a heat-stable oral mucosal delivery formulation of Entolimod utilizing proprietary formulation systems, with the objective of demonstrating systemic absorption via oral mucosal delivery. Under the SKL Agreement, the Company has an option, subject to an option period and other specified terms and conditions, to license the products and intellectual property developed under the agreement. In connection with the SKL Agreement, the Company is obligated to pay SKL a fixed fee of $0.5 million upon project commencement and maybe required to make additional payments of up to $7.2 million upon the achievement of specified development and regulatory milestones. The Company mayalso be obligated to pay up to an additional $12.5 million in sales-based milestone payments, as well as royalties on net sales of commercialized licensed products. As of June 30, 2026,*the Company had recorded a liability of $0.2 million related to the SKL Agreement, which is included in accounts payable in the accompanying condensed consolidated balance sheets.

Larmor Bio

In* April 2026,Velocity Bioworks, Inc., the Company's wholly-owned subsidiary, entered into a Purchase, Collaboration, and Strategic Partnership Agreement (the "Larmor Agreement") with LarmorBio, Inc., a Delaware corporation ("Larmor"), pursuant to which Velocity engaged Larmor to design, develop, and install a prototype real-time cell monitoring and analytics system tailored to Velocity's bioreactor specifications. Under the terms of the Larmor Agreement, Velocity has exclusive use of the system and associated technology within the CDMO sector for a specified period of time. Velocity was also granted a non-exclusive license to all future iterations and next-generation updates of the technology developed by Larmor during the term of the agreement. In addition, the Company was granted observer representation on Larmor's board of directors, as well as a right to invest in Larmor's equity, the terms of which remain subject to negotiation of a separate definitive agreement. Under the Larmor Agreement, Velocity has potential developmental and investment achievement milestone payment obligations of up to $1.4 million. As of June 30, 2026,*the Company had recorded a liability of $0.6 million related to the Larmor Agreement, which is included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets.

Contingencies

From time to time, the Company* mayhave certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when future expenditures are probable and such expenditures can be reasonably estimated. The Company recordedno liabilities for contingent matters as of June 30, 2026*.

Accrued licensing fees of $750 thousand as of* June**30,* 2026 represents the amount due for achievement of the Statera milestone, validation of current inventory of Materials for distribution and sales. Pursuant to the terms of the license agreement, as further described in Note9, Statera License Agreement, milestone payments* maybe paid in cash or equity at the Company's discretion. On July 31, 2026,*the Company issued an aggregate of 1,288 shares of its Series A Preferred Stock to Avenue and Statera in full settlement of the $750 thousand liability.

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Senior Secured Convertible Note Offering

On* December 9, 2025,the Company entered into a Securities Purchase Agreement (the "Note Purchase Agreement”) with3i,* pursuant to which the Company agreed to issue, in a private placement, upon the satisfaction of certain conditions specified in the Note Purchase Agreement, a senior secured convertible note (the "Note”) in the principal amount of $16,253,147 and a warrant (the "Note Offering Warrant”) to purchase up to an aggregate of 4,553,213 shares of the Company’s common stock, par value $0.0001 per share ("Common Stock”), to3i for an aggregate purchase price of $16,253,147 (the "Note Offering”). See Note15 for further information regarding the warrants.

The Company received gross proceeds of $16,253,147 from the Note Offering, all of which it used to fund the purchase of the Acquired Assets. Pursuant to the Note Purchase Agreement, the Company agreed to reimburse3i for all costs and expenses incurred by it or its affiliates in connection with the transactions contemplated by the Note Purchase Agreement, up to $100,000.

On* December 9, 2025,the Company, VBI and3i* entered into a Security Agreement (the "Security Agreement”), pursuant to which the Company and VBI granted security interests in the Collateral (as such term is defined in the Security Agreement) to secure the obligations of the Company under the Note and the Note Purchase Agreement.

The Note matures on thefifth anniversary of the issuance date (the "Maturity Date”), unless prior thereto there is an event of default, and bears interest at a rate of 5.0% per annum; provided, however, that upon the occurrence (and during the continuance) of an event of default, the Note shall bear interest at a rate of 10% per annum. Commencing on thefirst day of thefirst full calendar month that is18 months from the issuance date, and on thefirst day of each calendar month thereafter until the Maturity Date (each, an "Installment Date”), in each case provided that there has beenno Equity Conditions Failure (as defined in the Note), the Company shall pay3i an amount equal to the sum of (i) (a) with respect to any Installment Date other than the Maturity Date, the lesser of the (A) quotient of (I) the principal amount outstanding under the Note as of the initial Installment Date, divided by (II) the number of Installment Dates occurring under the Note and (B) the principal amount then outstanding under the Note as of such Installment Date and (b) with respect to the Installment Date that is the Maturity Date, the principal amount then outstanding under the Note as of such Installment Date; (ii) any Deferral Amount (as defined in the Note) deferred under the Note and included in such Installment Amount in accordance therewith; and (iii) in each case of clauses (i) and (ii), the sum of any accrued and unpaid interest, accrued and unpaid late charges, and Make-Whole Amount (as defined in the Note) as of the Installment Date (the "Installment Amount”) by converting such Installment Amount into shares of Common Stock; provided, however, that, the Company’s election, the Company* may*choose to redeem such Installment Amount in cash or by any combination of cash and shares of Common Stock.

In addition to the foregoing, the Note is convertible in part or in whole, at the option of the holder, at any time, into such number of shares of Common Stock of the Company equal to the sum of the principal amount of the Note, plus all accrued and unpaid interest, plus any Make-Whole Amount, plus any unpaid late charges (the "Holder Conversion Amount”) at a conversion price equal to $2.2310 (the "Conversion Price”), subject to adjustment for any stock splits, stock dividends, recapitalizations and similar events and subject to an Exchange Cap (as defined below) and other limitations; provided, however, that if at any time while the Note is outstanding, the Company sells or grants any options to purchase or sells or issues shares of Common Stock or common stock equivalents at a price below the Conversion Price then in effect (such lower price, the "Base Conversion Price”), then the Conversion Price shall be lowered to such Base Conversion Price. Notwithstanding the foregoing, subject to the terms of the Note, at any time after the effective date of a registration statement covering the shares of Common Stock issuable upon conversion of the Note (the "Note Conversion Shares”) and shares of Common Stock issuable upon exercise of the Note Offering Warrants (the "Note Offering Warrant Shares”), the holder shall be entitled to convert all or any portion of the unpaid Holder Conversion Amountnot exceeding $750,000 (or a higher amount mutually agreed upon by the Company and the holder) per calendar month into Conversion Shares at a conversion price equal to 97% of the lowest volume weighted average price ("VWAP”) of the shares of Common Stock during theten consecutive trading day period ending and including the trading day immediately prior to the conversion date, provided that the Alternative Conversion Price* may**not* be below $0.39 (the "Floor Price”). If the Alternative Conversion Price is below the Floor Price, then in addition to the issuance of the Note Conversion Shares, the Company shall pay the holder cash as a true-up in accordance with the Note. All conversions are subject to certain beneficial ownership limitations, as set forth in the Note.

The Note contains customary events of default, including key person departure events. If an event of default occurs,3imay require the Company to redeem (regardless of whether such event of default has been cured) all or any portion of the Note at the Redemption Price (calculated in accordance with the terms of the Note). Subject to limited exceptions set forth in the Note, the Note prohibits the Company and, as applicable, its subsidiaries from incurring any new indebtedness, other than permitted indebtedness. In* March 2026,*the Company obtained a waiver from the Note holder to avoid a potential key person departure event of default in connection with the departure of the Company’s CEO, Jennifer Ernst.

The Note is redeemable by the Company at a redemption price equal to 105% of the sum of the Installment Amount to be redeemed. While the Note is outstanding, if the Company enters into a Subsequent Placement (as such term is defined in the Note), the holder of the Note shall have the right to require that the Company redeem all, or any portion, of the amount due under the Note in an amountnot in excess of 36% of the net proceeds of such Subsequent Placement.

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The Note Offering Warrant shall be immediately exercisable (subject to certain beneficial ownership limitations and stockholder approval of the waiver of the Exchange Cap) expire five years from the date of issuance, and have an exercise price equal to $2.2310 (as* may*be adjusted for stock dividends, subdivisions, or combinations in the manner described in the Note Offering Warrant). The Note Offering Warrant provides for cashless exercise under certain circumstances. All exercises are subject to certain beneficial ownership limitations, as set forth in the Note Offering Warrant. The fair value of the 4,553,213 warrants as of the grant date is $9,404,375 is considered a debt discount and are netted against the note payable in the consolidated balance sheets. The debt discount is amortized through interest expense over the life of the debt utilizing the effective interest method.

Pursuant to the Note Purchase Agreement, from* December 9, 2025until the later of (i) the date that less than10%* of the principal of the Note is outstanding and (ii) the12- month anniversary of the issuance date (the "Restricted Period”), the Company shall be prohibited from entering into a Variable Rate Transaction (as such term is defined in the Note Purchase Agreement).Additionally, subject to certain exceptions, during the Restricted Period, the Company shall be prohibited from(i) issuing, entering into any agreement to issue or announcing the issuance or proposed issuance of Common Stock or Common Stock Equivalents (as such term is defined in the Note Purchase Agreement) or (ii) filing any registration statement or any amendments or supplements thereto. Further, during the Restricted Period,3ishall have the right to participate in any subsequent financing for up to20% of such financing.

The terms of the note were evaluated for embedded derivatives. We determined that certain conversion features of the Note required bifurcation of an embedded derivative. The derivative is recorded at fair value and is subject to marked-to-market remeasurement at each reporting period. The initial fair value of the derivative was $320 thousand and upon remeasurement as of* December 31, 2025,the change in net value of $28 thousand was recorded as other income in the consolidated statements of operations. Additional remeasurements as of March 31, 2026and June 30, 2026*resulted in an additional $33 thousand and $47 thousand, respectively, of other income recorded in the consolidated statements of operations.

The Company incurred $172 thousand in costs related to the issuance of the senior secured convertible note payable. The issuance costs are amortized, along with the debt discount, over the life of the note and are netted against the note payable in the consolidated balance sheets. For thethree months ended* June 30, 2026,*the Company recognized $691 thousand of interest expense related to the convertible note payable, which includes $489

thousand for the amortization of the debt discount and debt issuance costs and $202 thousand for accrued interest. For thesix months ended* June 30, 2026,*the Company recognized $1.3 million of interest expense related to the convertible note payable, which includes $0.9 million for the amortization of the debt discount and debt issuance costs and $0.4 million for accrued interest.

The Convertible note payable balance consists of the following (in thousands):

Utilizing the effective interest method, the following is a roll forward of the debt discount and debt issuance costs combined forthree andsix months months ended* June 30, 2026, (*in thousands):

Future payments associated with the Convertible note payable, including principal only, are as follows (in thousands):

The Company’s board of directors is authorized, without action by its stockholders, to designate and issue up to 10,000,000 shares of preferred stock inone or more series, and to fix the voting rights, designations, powers, preferences, the relative participating, optional or other special rights, if any, and any qualifications, limitations and restrictions thereof, applicable to the shares of any series of preferred stock that they* may*designate in the future.

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As of* June 30, 2026*, there were 403 shares of the Company’s Series A Non-Voting Convertible Preferred Stock, par value $0.0001 per share (“Series A Preferred Stock”),2,075 shares of the Company’s Series B Non-Voting Convertible Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”), and 11,687 shares of the Company's Series C Non-Voting Convertible Preferred Stock, par value $0.0001 per share ("Series C Preferred Stock"), issued and outstanding. As of* December 31, 2025* there were 403 shares of the Company’s Series A Preferred Stock,2,155 shares of the Company’s Series B Preferred Stock, and 12,000 shares of the Company's Series C Preferred Stock, issued and outstanding.

Series A Preferred Stock

On* February 10, 2025,*in connection with the License Agreement, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series A Non-Voting Convertible Preferred Stock (the “Series A Certificate of Designation”) with the Secretary of State of the State of Delaware, pursuant to which 6,000 shares of the Company’s authorized shares of preferred stock were designated as Series A Preferred Stock.

On* February 11, 2025,*in connection with, and as consideration for the License Agreement, the Company entered into a Securities Purchase Agreement with Statera, pursuant to which the Company issued and sold to Statera an aggregate of (i)55,635 shares of Company common stock and (ii) approximately 360 shares of Series A Preferred Stock for an aggregate price of approximately $1.2 million.

On* March 31, 2025,*in connection with the Company’s exercise of the Neutropenia Option pursuant to the License Agreement and as consideration for the Neutropenia Milestone Payment, the Company entered into a Securities Purchase Agreement with Statera and Avenue, pursuant to which the Company issued to Statera and Avenue shares of Company stock valued at $500 thousand, consisting of 55,704 shares of common stock and approximately 131 shares of Series A Preferred Stock.

Series B Preferred Stock

On* April 29, 2025,*the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series B Non-Voting Convertible Preferred Stock (the “Series B Certificate of Designation”) with the Secretary of State of the State of Delaware in connection with the Tranched Financing. The Series B Certificate of Designation became effective upon filing and designates 8,400 shares of the Company’s preferred stock as Series B Preferred Stock.

On* April 29, 2025,the Company entered into a Securities Purchase Agreement (the “Preferred Purchase Agreement”) with an investor (the “Investor”), pursuant to which, subject to the conditions set forth therein, the Company shall sell to the Investor, and the Investor shall purchase from the Company, up to 8,400 shares of the Company’s Series B Preferred Stock and warrants (“Investor Warrants”) to purchase shares of the Company’s common stock for a total purchase price of up to $8,400,000 (the “Tranched Financing”) in several tranche closings (each, a “Tranche Closing”). As of December 9, 2025,the Company had completedfour* of thesix tranche closings contemplated by the* April 2025Purchase Agreement. On December 9, 2025,the Investor assigned the April 2025Purchase Agreement, including all of its rights and obligations thereunder, to3i,and* 3i purchased all of the outstanding shares of Series B Preferred Stock from the Investor.

On* December 9, 2025,the Company and3i* entered into an Amendment to Securities Purchase Agreement (the "Amendment”), which amends the* April 2025*Purchase Agreement to:

Initial Tranche

On* June 25, 2025,the Company and the Investor held the initial Tranche Closing, pursuant to which the Company received gross proceeds of $700 thousand pursuant to the Preferred Purchase Agreement and issued 700 shares of Series B Preferred Stock to the Investor. In addition to the shares of Series B Preferred Stock, the Company issued Investor Warrants to purchase 61,287 shares of Company common stock with an initial exercise price of $3.85 per share. The Investor Warrants are exercisable immediately and expire on June 25, 2030.On August 21, 2025,in connection with closing of the Third Tranche and pursuant to the Investor Warrants, the exercise price of the Investor Warrants issued to Investor in the Initial Tranche was reduced to $3.372 per share. On September 26, 2025,in connection with closing of the Fourth Tranche and pursuant to the Investor Warrants, the exercise price of the Investor Warrants issued to the Investor in the Initial Tranche was further reduced to $3.04 per share. The triggering of the anti-dilution clause created a change in valuation of the Investor Warrants issued to the Investor. The valuation resulted in a deemed dividend from the repricing calculation of the 61,287 warrants of $1 thousand. On June 18, 2026,*in connection with closing of the Fifth Tranche and pursuant to the Investor Warrants, the exercise price of the Investor Warrants issued to the Investor in the Initial Tranche was further reduced to $0.6128 per share. The triggering of the anti-dilution clause created a change in valuation of the Investor Warrants issued to the Investor. The valuation resulted in a deemed dividend from the repricing calculation of the 61,287 warrants of $6 thousand.

Additionally, as consideration for placement agent services rendered by Craft in connection therewith, the Company paid Craft $56 thousand at closing of the Initial Tranche and issued warrants to purchase an aggregate of 10,000 shares of Company common stock to the designees of Craft, which warrants have a term offour years from the date of issuance, are exercisable immediately upon issuance, and have an exercise price of $4.20 per share of common stock (equal to 110% of the closing price per share of the Company’s common stock on* June 25, 2025).*Net proceeds to the Company, after deducting placement agent fees and offering expenses paid by the Company, were $585 thousand. The net proceeds were allocated between the Series B Preferred Stock and Investor Warrants issued in the offering based on the relative fair values, which were $398 thousand and $187 thousand, respectively.

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Between* July 31, 2025and August 15, 2025,*the Investor converted all 700 Initial Tranche Preferred Shares issued to the Investor in connection with the Initial Tranche Closing into an aggregate of 244,597 shares of common stock.

Second Tranche

On* July 31, 2025,the Company and the Investor held thesecond* Tranche Closing, pursuant to which the Company received gross proceeds of $700 thousand pursuant to the Preferred Purchase Agreement and issued 700 shares of Series B Preferred Stock to the Investor. In addition to the shares of Series B Preferred Stock, the Company issued Investor Warrants to purchase 64,065 shares of Company common stock with an initial exercise price of$3.966 per share. The Investor Warrants are exercisable immediately and expire on* July**31,* 2030. On* August 21, 2025,in connection with closing of the Third Tranche and pursuant to the Investor Warrants, the exercise price of the Investor Warrants issued to the Investor in the Second Tranche was reduced to $3.372 per share. On September 26, 2025,in connection with closing of the Fourth Tranche and pursuant to the Investor Warrants, the exercise price of the Investor Warrants issued to the Investor in the Second Tranche was further reduced to $3.04 per share. The triggering of the anti-dilution clause created a change in valuation of the Investor Warrants issued to the Investor. The valuation resulted in a deemed dividend from the repricing calculation of the 64,065 warrants of $4 thousand. On June 18, 2026,*in connection with closing of the Fifth Tranche and pursuant to the Investor Warrants, the exercise price of the Investor Warrants issued to the Investor in the Second Tranche was further reduced to $0.6128 per share. The triggering of the anti-dilution clause created a change in valuation of the Investor Warrants issued to the Investor. The valuation resulted in a deemed dividend from the repricing calculation of the 64,065 warrants of $18 thousand.

Additionally, as consideration for placement agent services rendered by Craft in connection therewith, the Company paid Craft $56 thousand at closing of the Initial Tranche and issued warrants to purchase an aggregate of 11,068 shares of Company common stock to the designees of Craft, which warrants have a term offour years from the date of issuance, are exercisable immediately upon issuance, and have an exercise price of $3.795 per share of common stock (equal to 110% of the closing price per share of the Company’s common stock on* July**31,* 2025). Net proceeds to the Company, after deducting placement agent fees and offering expenses paid by the Company, were $625 thousand. The net proceeds were allocated between the Series B Preferred Stock and Investor Warrants issued in the offering based on the relative fair values, which were $458 thousand and $167 thousand, respectively.

Between* August 15, 2025and October 8, 2025,*the Investor converted all 700 Second Tranche Preferred Shares issued to the Investor in connection with the Second Tranche Closing into an aggregate of 252,710 shares of common stock.

Third Tranche

On* August 21, 2025,the Company and the Investor held thethird* Tranche Closing, pursuant to which the Company received gross proceeds of $1,750,000 pursuant to the Preferred Purchase Agreement and issued 1,750 shares of Series B Preferred Stock to the Investor. In addition to the shares of Series B Preferred Stock, the Company issued Investor Warrants to purchase 188,842 shares of Company common stock with an initial exercise price of $3.372 per share. On* September 26, 2025,in connection with closing of the Fourth Tranche and pursuant to the Investor Warrants, the exercise price of the Investor Warrants issued to the Investor in the Initial Tranche was further reduced to $3.04 per share. The triggering of the anti-dilution clause created a change in valuation of the Investor Warrants issued to the Investor. The valuation resulted in a deemed dividend from the repricing calculation of the 188,842 warrants of $5 thousand. On June 18, 2026,*in connection with closing of the Fifth Tranche and pursuant to the Investor Warrants, the exercise price of the Investor Warrants issued to the Investor in the Initial Tranche was further reduced to $0.6128 per share. The triggering of the anti-dilution clause created a change in valuation of the Investor Warrants issued to the Investor. The valuation resulted in a deemed dividend from the repricing calculation of the 188,842 warrants of $51 thousand.

Additionally, as consideration for placement agent services rendered by Craft in connection therewith, the Company paid Craft $140 thousand at closing of the Third Tranche and issued warrants to purchase an aggregate of 29,830 shares of Company common stock to the designees of Craft, which warrants have a term offour years from the date of issuance, are exercisable immediately upon issuance, and have an exercise price of $3.52 per share of common stock (equal to 110% of the closing price per share of the Company’s common stock on* August 21, 2025).*Net proceeds to the Company, after deducting placement agent fees and offering expenses paid by the Company, were $1.6 million. The net proceeds were allocated between the Series B Preferred Stock and Investor Warrants issued in the offering based on the relative fair values, which were $1.1 million and $0.5 million, respectively. The relative fair value of the warrants was classified as additional paid in capital.

Between* October 27, 2025and November 5, 2025,the Investor converted 160 shares of the Third Tranche Preferred Shares issued to the Investor in connection with the Third Tranche Closing into an aggregate of 70,220 shares of common stock. As of each June**30,* 2026 and* December 31, 2025,1,590 of the Third Tranche Preferred Shares remained outstanding. Based on the relative fair value of the Third Tranche Preferred Shares, along with accrued dividends, a total of $1.1 million and $1.0 million, was included in temporary equity as of June 30, 2026and December 31, 2025,*respectively.

Fourth Tranche

On* September 26, 2025,the Company and the Investor held thefourth* Tranche Closing, pursuant to which the Company received gross proceeds of $1,750,000 pursuant to the Preferred Purchase Agreement and issued 1,750 shares of Series B Preferred Stock to the Investor. In addition to the shares of Series B Preferred Stock, the Company issued to the Investor Warrants to purchase 195,793 shares of Company common stock with an initial exercise price of $3.04 per share. On* June 18, 2026,*in connection with closing of the Fifth Tranche and pursuant to the Investor Warrants, the exercise price of the Investor Warrants issued to the Investor in the Initial Tranche was reduced to $0.6128 per share. The triggering of the anti-dilution clause created a change in valuation of the Investor Warrants issued to the Investor. The valuation resulted in a deemed dividend from the repricing calculation of the 195,793 warrants of $49 thousand.

Additionally, as consideration for placement agent services rendered by Craft in connection therewith, the Company paid Craft $140 thousand at closing of the Fourth Tranche and issued warrants to purchase an aggregate of 32,249 shares of Company common stock to the designees of Craft, which warrants have a term offour years from the date of issuance, are exercisable immediately upon issuance, and have an exercise price of $3.256 per share of common stock (equal to 110% of the closing price per share of the Company’s common stock on* September 26, 2025).*Net proceeds to the Company, after deducting placement agent fees and offering expenses paid by the Company, were $1.6 million. The net proceeds were allocated between the Series B Preferred Stock and Investor Warrants issued in the offering based on the relative fair values, which were$1.1 million and$0.5 million, respectively. The relative fair value of the warrants was classified as additional paid in capital.

In* December 2025,3i converted 1,185 shares of the Fourth Tranche Preferred Shares assigned to3i in connection with the Fourth Tranche Closing into an aggregate of 743,330 shares of common stock. During thesix months ended June 30, 2026,a total of 330 of the Fourth Tranche Preferred Shares were converted into an aggregate of 488,975 shares of common stock. As of June 30, 2026and December 31, 2025,235 and 565 of the Fourth Tranche Preferred Shares remain outstanding, respectively. Based on the relative fair value of the Fourth Tranche Preferred Shares, along with accrued dividends, a total of$160 thousand and $361 thousand was included in temporary equity as of June 30, 2026and December 31, 2025,*respectively.

Fifth Tranche

On* June 18, 2026,the Company and the Investor held thefifth* Tranche Closing, pursuant to which the Company received gross proceeds of $250,000 pursuant to the Preferred Purchase Agreement and issued 250 shares of Series B Preferred Stock to the Investor. In addition to the shares of Series B Preferred Stock, the Company issued Investor Warrants to purchase 156,026 shares of Company common stock with an initial exercise price of $0.6128 per share. Net proceeds to the Company, after deducting offering expenses paid by the Company, were $241 thousand. The net proceeds were allocated between the Series B Preferred Stock and Investor Warrants issued in the offering based on the relative fair values, which were $169 thousand and $72 thousand, respectively. The relative fair value of the warrants was classified as additional paid in capital. As of* June 30, 2026all 250 of the Fifth Tranche Preferred Shares remain outstanding. Based on the relative fair value of the Fifth Tranche Preferred Shares, a total of$170 thousand was included in temporary equity as of June 30, 2026.*

Redeemable Preferred Units

Redeemable non-controlling interests are reported on the consolidated balance sheets as Temporary Equity.

In connection with the issuance of Series B Redeemable Preferred Stock, there were conditions attributed to future financing which were deemed to be outside the control of the Company. As a result of this provision, there could be a redemption trigger initiated by the holder. Therefore, the Series B Preferred Stock are probable of becoming redeemable and will be classified as temporary (‘mezzanine’) equity.

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Series C Preferred Stock

On* December 9, 2025,*the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series C Non-Voting Convertible Preferred Stock (the "Series C Certificate of Designation”) with the Secretary of State of the State of Delaware. The Series C Certificate of Designation became effective upon filing and designates 75,000 shares of the Company’s preferred stock as Series C Preferred Stock.

On* December 9, 2025,*the Company entered into a Securities Purchase Agreement (the "Preferred Purchase Agreement”) with certain institutional investors (collectively, the "Preferred Offering Investors”), pursuant to which, subject to the conditions set forth therein, the Company agreed to sell to the Preferred Offering Investors, and the Preferred Offering Investors agreed to purchase from the Company, up to 75,000 shares of the Company’s newly designated Series C Non-Voting Convertible Preferred Stock ("Series C Preferred Stock”) and warrants ("Preferred Offering Warrants”) to purchase shares of Common Stock for a total purchase price of up to $75,000,000 (the "Preferred Offering”) in several tranche closings (each, a "Tranche Closing”).

The Preferred Purchase Agreement provides that the Preferred Offering shall be conducted through a series of separate Tranche Closings pursuant to which, subject to satisfaction of the applicable closing conditions set forth in the Preferred Purchase Agreement, the Company shall sell and issue the Preferred Offering Investors up to an aggregate of 75,000 shares of Series C Preferred Stock, at a price of $1,000 per share, as follows: (i)12,000 shares of Series C Preferred Stock, for $12,000,000 in gross proceeds to the Company, in the initial Tranche Closing, which was consummated on* December 10, 2025; (ii)6,000 shares of Series C Preferred Stock, for $6,000,000 in gross proceeds to the Company, in thesecond* Tranche Closing, which shall be consummatedthree business days after the Second Tranche Closing Conditions (as defined below) have been satisfied or waived; and (iii) up to an aggregate of 57,000 shares of Series C Preferred Stock, for an aggregate of up to $57,000,000 in a series of subsequent Tranche Closings (each a "Subsequent Tranche Closing,” and together the "Subsequent Tranche Closings”), which shall be consummated when the Subsequent Tranche Closing Conditions (as defined in the Preferred Purchase Agreement) have been satisfied or waived, including butnot limited to that the aggregate stated value of the Series C Preferred Stock outstanding doesnot exceed $3,000,000 and certain additional volume and price conditions are met.

In addition to the shares of Series C Preferred Stock to be sold and issued to the Investors in the Preferred Offering, at each Tranche Closing the Company shall also issue the Preferred Offering Investors an aggregate of Preferred Offering Warrants to purchase that number of shares of Company common stock equal to 50% of shares of common stock issuable upon conversion in full of the shares of Series C Preferred Stock issued in connection with the same Tranche Closing. Each Preferred Offering Warrant shall be immediately exercisable (subject to certain beneficial ownership limitations and Stockholder Approval), expire five years from the date of issuance, and have an exercise price of $2.2310 (as* may*be adjusted for stock dividends, subdivisions, or combinations in the manner described in the Preferred Offering Warrant).

In the event that the closing price of the Company’s common stock during the priorthree trading days preceding a Tranche Closing date shall be lower than the Floor Price, then the applicable Tranche Closing shall be delayed until such time as the price meets the required threshold for a period offive consecutive trading days. Notwithstanding the foregoing, the Preferred Offering Investors have the ability, subject to prior written consent of the Company, to purchase any number of shares of Series C Preferred Stock prior to the dates of the Tranche Closings provided for in the Preferred Purchase Agreement during the term of the Preferred Purchase Agreement.

Pursuant to the Preferred Purchase Agreement, subject to certain exceptions, through the later of (i) the date that less than 1,200 Preferred Shares are outstanding and (ii)* December 9, 2026 (the "ROFR Period”), the Preferred Offering Investors will have a right offirst* refusal to with respect to any investment proposed to be made by any other person for each and every future variable rate transaction during the ROFR Period. Additionally, subject to certain exceptions, through the later of (i) the date that less than 1,200 Preferred Shares are outstanding and (ii)* December 9, 2026,*the Preferred Offering Investors shall have the right to participate in any subsequent financing for up to 20% of such financing.

The Preferred Purchase Agreement contains customary termination provisions for the Investors under certain limited circumstances, and the Preferred Purchase Agreement will automatically terminate if any Tranche Closing hasnot occurred prior to* June 9, 2027.*

Initial Tranche

On* December 11, 2025,the Company and the Preferred Offering Investors held the initial Tranche Closing, pursuant to which the Company received gross proceeds of $12 million pursuant to the Preferred Purchase Agreement and issued 12,000 shares of Series C Preferred Stock to the Preferred Offering Investors. In addition to the shares of Series C Preferred Stock, the Company issued Preferred Offering Investor Warrants to purchase 2,904,528 shares of Company common stock with an initial exercise price of $2.231 per share. The Preferred Offering Investor Warrants are exercisable immediately and expire on December 10, 2030.Net proceeds to the Company, after deducting offering expenses paid by the Company, were $11.9 million. The net proceeds were allocated between the Series C Preferred Stock and Investor Warrants issued in the offering based on the relative fair values, which were $5.9 million and $5.9 million, respectively. The relative fair value of the warrants was classified as additional paid in capital. During thesix* months ended* June 30, 2026,an aggregate of 313 shares of Series C Preferred Stock were converted into 494,533 shares of common stock. As of June* 30, 2026, 11,687 shares of Series C Preferred Stock remain outstanding. Based on the relative fair value of the Series C Preferred Stock, a total of $6.2 million was included in temporary equity as of* June 30, 2026.As of December**31,* 2025, 12,000 shares of Series C Preferred Stock remained outstanding. Based on the relative fair value of the Series C Preferred Stock, a total of $6.0 million was included in temporary equity as of* December 31, 2025.*

Redeemable Preferred Units

Redeemable non-controlling interests are reported on the consolidated balance sheets as Temporary Equity.

In connection with the issuance of Series C Redeemable Preferred Stock, there were conditions attributed to future financing which were deemed to be outside the control of the Company. As a result of this provision, there could be a redemption trigger initiated by the holder. Therefore, the Series C Preferred Stock are probable of becoming redeemable and will be classified as temporary (‘mezzanine’) equity.

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At* June 30, 2026* and* December 31, 2025*, there were 4,151,919 and 2,525,778 shares of Company common stock issued and outstanding, respectively.

Effective* March 7, 2025,the Company implemented a reverse stock split of its issued and outstanding shares of common stock, par value $0.0001 per share, at a ratio of1*-for-17.As a result of the reverse stock split, the total number of shares of common stock held by each stockholder of the Company were converted automatically into the number of shares of common stock equal to the number of issued and outstanding shares of common stock held by each such stockholder immediately prior to the reverse stock split divided by 17. Refer to Note2, Summary of Significant Accounting Policies, for details of the reverse stock split.

On* February 11, 2025,*in connection with, and as consideration for, the License Agreement, the Company entered into a Securities Purchase Agreement with Statera, pursuant to which it issued and sold to Statera an aggregate of (i)55,635 shares of Company common stock and (ii) approximately 360 shares of Series A Preferred Stock for an aggregate price of approximately $1.2 million.

On * March 31,2025,* in connection with the Company’s exercise of the Neutropenia Option pursuant to the License Agreement and as consideration for the Neutropenia Milestone Payment, the Company entered into a Securities Purchase Agreement with Statera and Avenue, pursuant to which the Company issued to Statera and Avenue an aggregate of $500 thousand shares of Company stock, consisting of an aggregate of 55,704 shares of common stock and approximately 131 shares of Series A Preferred Stock.

On* February 6, 2026,the Company entered into a Common Stock Purchase Agreement (the "Purchase Agreement”) with Tumim Stone Capital, LLC, a Delaware limited liability company (the "Investor”). Pursuant to the Purchase Agreement, the Company has the right, butnot* the obligation, to sell to the Investor up to the lesser of: (a) $50,000,000 of newly issued shares of the Company’s common stock, par value $0.0001 per share (the "Common Stock”), and (b) the Exchange Cap (as defined below), from time to time, at the Company’s sole discretion (each such sale, a "VWAP Purchase”) by delivering an irrevocable written notice to the Investor (each such notice, a "VWAP Purchase Notice”). The Company shall be permitted to deliver a VWAP Purchase Notice to Investor during the period commencing on the Commencement Date (as defined in the Purchase Agreement) and the date that is thefirst day of the month following the24-month anniversary of the date on which the initial Registration Statement (as defined below) has been declared effective by the U.S. Securities and Exchange Commission (the "SEC”), subject to the terms and conditions set forth therein, and unless the Purchase Agreement is earlier terminated in accordance with its terms. On* June 22, 2026,the Company delivered a VWAP Purchase Notice for 129,000 shares which resulted in proceeds of $69 thousand. As of June 30, 2026,*a total of $49.9 million remains available under the Purchase Agreement.

On* February 6, 2026,as consideration for the Investor’s commitment to purchase shares of Common Stock, the Company issued a pre-funded warrant to purchase 437,012 shares of Common Stock (the "Pre-Funded Warrants”), to the Investor as a commitment fee (the "Commitment Fee”). The fair value of the pre-funded warrants was $375 thousand and was recorded to additional-paid-in-capital at issuance. During the quarter ended June 30, 2026,*all of the pre-funded warrants were exercised and converted into 437,012 shares of common stock.

Pre-Funded Warrants

The Pre-Funded Warrants issued to the Investor as the Commitment Fee are exercisable immediately upon issuance and willnot expire until exercised in full. The exercise price of the Pre-Funded Warrants is $0.0001 per share (nominal), as the exercise price was pre-funded to the Company in connection with the payment of the Commitment Fee. The Pre-Funded Warrants* may*be exercised on a cashless basis. The Pre-Funded Warrants contain a beneficial ownership limitation that prevents the Investor from exercising the warrants to the extent that such exercise would result in the Investor (together with its affiliates) beneficially owning more than 4.99% (or, at the election of the Investor,9.99%) of the outstanding shares of Common Stock. The Pre-Funded Warrants are subject to customary adjustment provisions in the event of stock dividends, stock splits, combinations, reclassifications, or similar events. In the event of a Fundamental Transaction (as defined in the Pre-Funded Warrants), the holder will be entitled to receive, upon exercise, the same kind and amount of consideration that a holder of Common Stock would have received in connection with such transaction. The shares of Common Stock issuable upon exercise of the Pre-Funded Warrants will be registered for resale under the Registration Statement.

Registration Rights Agreement

In connection with the transactions contemplated by, and concurrently with the execution of, the Purchase Agreement, the Company and the Investor also entered into a Registration Rights Agreement, dated as of* February 6, 2026 (the "Registration Rights Agreement”), pursuant to which the Company agreed to file with the SECone* or more registration statements (a "Registration Statement”), to register under the Securities Act of1933, as amended (the "Securities Act”), the offer and resale by the Investor of all of the shares that* may*be issued by the Company to the Investor from time to time under the Purchase Agreement, including shares of Common Stock issuable upon exercise of the Pre-Funded Warrant. The Investor’s obligation to purchase shares of Common Stock pursuant to the Purchase Agreement is subject to such a Registration Statement being filed with the SEC and declared effective.

Common stockholders are entitled to dividends if and when declared by the Company’s board of directors, subject to the rights of the preferred stockholders. As of* June 30, 2026*,no dividends on common stock had been declared by the Company. As of* June 30, 2026* and* December 31, 2025*, the Company had reserved shares of common stock for issuance as follows:

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In* February 2026,the Company issued 437,012 pre-funded warrants to Tumim as the commitment fee for the Company's equity line of credit. The pre-funded warrants were exercisable immediately upon issuance. The exercise price of the pre-funded warrants was $0.0001 per share (nominal) as the exercise price was pre-funded to the Company in connection with the payment of the commitment fee. The pre-funded warrants were exercised in thesecond* quarter of2026.

A summary of the Company’s outstanding warrants as of* June 30, 2026* is as follows:

As of* June**30,* 2026, the weighted-average exercise price of the warrants outstanding was $2.93 per share and the weighted-average remaining term was 4.3 years. During thesix months ended* June 30, 2025,*a total of 7,524 Series A Warrants were exercised for total proceeds of$109 thousand.

2017 Equity Incentive Plan

In2017, the Company adopted its2017 Equity Incentive Plan (the*“2017* Plan”).

On* November 10, 2021,the2017* Plan terminated and was replaced by the2021 Plan (defined below), and future issuances of incentive instruments will be governed by the2021 Plan. To the extent that outstanding awards under the2017 Plan are forfeited or lapse unexercised, the shares of common stock subject to such awards willno longer be available for future issuance.

2021 Equity Incentive Plan

In2021, the Company adopted the2021 Equity Incentive Plan (the*“2021* Plan”). The plan allows for the issuance of incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock units, stock bonus awards and performance-based awards. Awards granted under the2021 Plan are determined by the Compensation Committee of the Company’s board of directors, who is responsible for administering the2021 Plan. The term for stock options shall beno more thanten years from the date of grant. In the case of an Incentive Stock Option granted to an optionee who, at the time the option is granted, owns stock representing more than10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the option shall befive years from the date of grant or such shorter term as* maybe provided in the option Agreement. To the extent outstanding awards under the2021* Plan are forfeited or lapse unexercised, the shares of common stock subject to such awards will be available for future issuance under the2021 Plan. The2021 Plan provides that additional shares will automatically be added to the shares authorized for issuance under the2021 Plan on* January 1of each year. The number of shares added each year will be equal to the lesser of: (i)5.0% of the outstanding shares of the Company’s common stock on December**31st* of the preceding calendar year or (ii) such number of shares determined by the board of directors, in its discretion. On* January 1, 2024,4,312 shares were automatically added to the number of shares authorized for issuance under2021* Plan (an increase equal to 5% of the number of the outstanding shares of Company common stock as of* December 31, 2023).*

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Amended and Restated2021* Equity Incentive Plan, as amended*

On* August 9, 2024,the Company adopted its Amended and Restated2021* Equity Incentive Plan (the “A&R2021 Plan”), which amended and restated the2021 Plan in full to, amongst other things, increase the number of shares of common stock authorized for issuance thereunder from 5,434 shares to 58,823 shares. The Company’s board of directors unanimously approved the adoption of the A&R2021 Plan, subject to stockholder approval, on* June 15, 2024,and the Company’s stockholders approved the A&R2021* Plan at the Company’s2024 Annual Meeting of Stockholders held on* August 9, 2024.On January 1, 2025,27,846 shares were automatically added to the number of shares authorized for issuance under A&R2021* Plan (an increase equal to 5% of the number of the outstanding shares of Company common stock as of* December 31, 2025).On January 1, 2026,126,289 shares were automatically added to the number of shares authorized for issuance under A&R2021* Plan (an increase equal to 5% of the number of the outstanding shares of Company common stock as of* December 31, 2025).*

On* June 30, 2025,following stockholder approval, the Company further amended the A&R2021* Plan to increase the number of shares of common stock authorized for issuance thereunder from 86,669 to 511,669 shares. On* May 28, 2026,following stockholder approval, the Company further amended the A&R2021* Plan to increase the number of shares of common stock authorized for issuance thereunder from 637,958 to 3,219,566 shares.

As of* June 30, 2026,there were 2,774,278 shares of common stock available for issuance under the A&R2021* Plan, as amended.

Stock Options

In the case of an incentive stock option (i) granted to an employee who, at the time of grant of such option, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary of the Company, the exercise price shall beno less than 110% of the fair market value per share on the date of grant; (ii) granted to any other employee, the per share exercise price shall beno less than 100% of the fair market value per share on the date of grant. In the case of a non-statutory stock option (i) granted to an employee who, at the time of grant of such option, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary of the Company, the exercise price shall beno less than 110% of the fair market value per share on the date of grant; (ii) granted to any other service provider, the per share exercise price shall beno less than 100% of the fair market value per share on the date of grant. Notwithstanding the foregoing, options* may*be granted with a per share exercise price other than as required above pursuant to a merger or other corporate transaction.

The options* may*include provisions permitting exercise of the option prior to full vesting. Any unvested shares upon termination shall be subject to repurchase by the Company at the original exercise price of the option. Stock options granted under the Company’s equity incentive plans generally vest over four years from the date of grant.

The following table summarizes the stock option award activity for thesix months ended* June 30, 2026:*

The weighted-average exercise price as of* June 30, 2026for stock options outstanding and stock options exercisable was $6.13 and $22.63, respectively. The weighted average remaining contractual life as of June 30, 2026for stock options outstanding and stock options exercisable was 8.38 and 4.04 years, respectively. Stock-based compensation expense related to stock options was $63 thousand and $206 thousand for thethree* andsix months ended* June 30, 2026,respectively. Stock-based compensation expense related to stock options was $57 thousand and $131 thousand for thethree* andsix months ended* June 30, 2025,respectively. As of June 30, 2026,*there was $576 thousand of remaining expense, which is expected to be amortized over 3.16 years.

Restricted Stock Awards

There wasno restricted stock award activity, andno restricted stock awards outstanding, during thesix months ended* June 30, 2026.During thesix* months ended* June 30, 2025,a total of 111 restricted stock awards vested and $2 thousand of stock-based compensation was recorded. There wereno remaining restricted stock awards outstanding as of June**30,* 2025.

Restricted Stock Units

The following table sets forth the status of the Company’s restricted stock units issued to employees for thesix months ended* June 30, 2026:*

The fair value of restricted stock units granted during each of thethree andsix months ended* June30,* 2026 was $50 thousand. The fair value of restricted stock units granted during each of thethree andsix months ended* June30,* 2025 was $306 thousand. Stock-based compensation expense related to restricted stock units was $70 thousand and $135 thousand for thethree andsix months ended* June 30, 2026 ,respectively. Stock-based compensation expense related to restricted stock units was $33 thousand and $57 thousand for thethree* andsix months ended* June 30, 2025 ,respectively. As of June 30, 2026,*there was $203 thousand of remaining expense, which is expected to be amortized over 2.62 years.

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Total Stock-Based Compensation

Total stock-based compensation recorded in the condensed consolidated statements of operations is allocated as follows (in thousands):

The Company applies thetwo-class method pursuant to the issuance of our Series B Preferred Stock and Series C Preferred Stock. Accordingly, the Company’s basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Net loss attributable to common stockholders is equal to the Company’s net loss.

Diluted earnings per share are calculated using the more dilutive of thetwo-class or if-converted methods. Thetwo-class method uses net income available to common stockholders and assumes conversion of all potential shares other than the participating securities. The if-converted method uses net income and assumes conversion of all potential shares including the participating securities. In* February 2026,the Company issued pre-funded warrants to Tumim as consideration of the commitment fee associated with an equity line of credit. The shares of common stock into which the pre-funded warrants maybe exercised are considered outstanding from the date of issuance for the purposes of computing basic loss per share because the shares maybe issued for little orno* consideration and because the pre-funded warrants were fully vested and immediately exercisable upon issuance.

For the periods where a net loss attributable to common stockholders is present, dilutive securities have been excluded from the calculation of diluted net loss per share attributable to common stockholders as including them would have been anti-dilutive.

The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share for the periods presented due to their antidilutive effect:

Valion Bio is developing biologics that activate the immune pathways to protect and restore tissue in conditions driven by radiation, disease, and immune dysregulation. As of* December 10, 2025,*the Company also operates a contract development and manufacturing organization (or "CDMO") through the Company's wholly owned subsidiary, Velocity Bioworks, Inc., (or "VBI"). The CDMO provides development services to Valion to support the manufacturing of Entolimod, the Company's lead product candidate. The Company manages its business activities astwo operating segments, the biopharma business and the CDMO business. Valion's Chief Executive Officer is the Chief Operating Decision Maker ("CODM"). The CODM utilizes the Company's long-term plan, which includes product development roadmaps and long term financial models, as key input to resource allocation. The CODM makes decisions on resource allocation, assesses performance of the business, and monitors budget versus actual results using factors such as operating expenses, loss from operations and net loss.

Prior to* December 2025,we operated as a single operating segment. For thethree* months ended* June 30, 2026,*we havetwo reportable segments; Biopharma and the CDMO. Our Biopharma segment is engaged in the development and commercialization of our pharmaceutical product candidates and is operated from our corporate headquarters in San Antonio, Texas. Our CDMO segment offers contract development and manufacturing services to Valion and external customers. The manufacturing site is located in San Antonio, Texas. The Company'stwo reportable business segments are managed separately based on the differences in their operations. The Company evaluates performance of its segments based on the contribution to operating income (loss) of the respective segments.

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Financial information by business segment is set forth below (in thousands):

All of the Company's assets are located in the United States.

On* July 31, 2026,*the Company issued an aggregate of 1,287.8685 shares of Series A Preferred Stock, as partial consideration for the Milestone Payment in the amount of $750,000, relating to the validation of current inventory of materials for distribution and sales, to Statera and Avenue.

On* July 31, 2026,*in connection with the Milestone Payment, the Company entered into a securities purchase agreement with Avenue, pursuant to which the Company issued certain shares of Series A Preferred Stock as partial consideration for the Milestone Payment.

The securities purchase agreement provides certain registration rights related to the securities subject thereto. Specifically, the Company is required to prepare and file a resale registration statement with the U.S. Securities and Exchange Commission (the “SEC”) within60 calendar days following the closing date, with respect to the resale of all of the shares of common stock of the Company underlying the Series A Preferred Stock issued thereunder.

Neither the shares of Series A Preferred Stock or the shares of common stock issuable upon conversion of the Series A Preferred Stock, are currently registered under the Securities Act andnone of such shares* may*be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws. The shares of Series A Preferred Stock are subject to certain limitations of conversion, as further described in the Certificate of Designation of Series A Non-Voting Convertible Preferred Stock, including that a holder of Series A Preferred Stock is prohibited from converting shares of Series A Preferred Stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (to be established by the holder between 4.9% and 19.9%) of the total number of shares of common stock issued and outstanding immediately after giving effect to such conversion.

On* August 12, 2026,holders of our Series B convertible preferred stock converted an aggregate of 300 shares, which resulted in the issuance of 846,666 shares of common stock. On August 12and August 13, 2026,*holders of our Series C convertible preferred stock converted an aggregate of 5,600 shares, which resulted in the issuance of 16,145,457 shares of common stock. Subsequent to the stock issuances, there were a total of 22,189,739 shares of our common stock issued and outstanding.

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