Viridian Therapeutics, Inc.\DE

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE BUSINESS

Viridian Therapeutics, Inc., a Delaware corporation (the “Company” or “Viridian”), is a biopharmaceutical company focused on discovering, developing and commercializing potentially best-in-class medicines for autoimmune and rare diseases. The Company commercializes veligrotug, trade name Lumvoa™ (veligrotug-vvze), for thyroid eye disease (“TED”). Veligrotug was approved by the U.S. Food and Drug Administration (“FDA”) for the treatment of TED in June 2026 and is a differentiated monoclonal antibody targeting insulin-like growth factor-1 receptor (“IGF-1R”), a clinically and commercially validated target for the treatment of TED. The Company’s second product candidate for TED, elegrobart, is an extended half-life monoclonal antibody with the same binding domains as veligrotug and designed to be subcutaneously administered via a convenient, low-volume autoinjector. TED is a serious and debilitating rare autoimmune disease that causes inflammation within the orbit of the eye that can cause bulging of the eyes, redness and swelling, double vision, pain, and potential blindness. Viridian additionally announced a program targeting the thyroid stimulating hormone receptor (“TSHR”) in January 2026 that has the potential to be developed for the treatment of TED and Graves’ disease.

In addition to developing and commercializing therapies for TED, the Company is also developing a portfolio of engineered anti-neonatal Fc receptor (“FcRn”) inhibitors, including VRDN-006 and VRDN-008. FcRn inhibitors have the potential to treat a broad array of autoimmune diseases, representing a significant commercial market opportunity.

Liquidity and Capital Resources

The Company’s unaudited condensed consolidated financial statements have been prepared on the basis of the Company continuing as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from any uncertainty related to its ability to continue as a going concern. The Company expects that its cash, cash equivalents and marketable securities as of June 30, 2026 of $981.5 million will enable the Company to fund its planned operations for at least twelve months from the date of issuance of these unaudited condensed consolidated financial statements.

The Company has funded its operations to date principally through proceeds received from the sale of the Company’s common stock, Series A convertible preferred stock, Series B convertible preferred stock, and other equity securities, debt financings, and license fees and reimbursements received under collaboration agreements. The Company has incurred recurring losses and negative cash flows from operations since inception. As of June 30, 2026, the Company had an accumulated deficit of $1,570.5 million. Prior to the approval of veligrotug in June 2026 and through June 30, 2026, the Company had not generated any revenue from product sales. Substantially all of the Company’s operating losses resulted from expenses incurred in connection with its research and development programs and from selling, general and administrative costs associated with its operations. In addition, the Company may continue to incur additional operating losses as a result of planned expenditures for research and development activities, its drug development programs, including clinical trial and manufacturing costs, and the continued build-out of clinical, manufacturing, commercial and compliance capabilities.

The future viability of the Company is dependent on its ability to generate cash from operating activities or to raise additional capital to finance its operations. There can be no assurance that the Company will ever achieve profitability, or if achieved, that profitability will be sustained on a continuing basis. In addition, the Company’s nonclinical and clinical development activities, manufacturing activities, and commercialization activities for the Company’s product candidates, if approved, may require significant additional capital. Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on the Company’s financial condition and its ability to develop its product candidates. Changing circumstances may cause the Company to consume capital significantly faster or slower than currently anticipated. If the Company is unable to acquire additional capital or resources, it will be required to modify its operational plans. The estimates included herein are based on assumptions that may prove to be wrong, and the Company could exhaust its available financial resources sooner than currently anticipated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”), and Accounting Standards Updates (“ASU”), or the Financial Accounting Standards Board (“FASB”).

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Management has determined that the Company operates inone segment, which is the business of developing and commercializing novel therapeutics.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 26, 2026 (the “2025 Annual Report”). The Company’s management performed an evaluation of its activities through the date of filing of these unaudited condensed consolidated financial statements and concluded that there are no subsequent events requiring disclosure.

Unaudited Interim Condensed Consolidated Financial Information

In the opinion of management, all adjustments, consisting of normal recurring accruals and revisions of estimates, considered necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. Interim results for the six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2026, or any other future period.

During the six months ended June 30, 2026, there have been no changes to the Company’s significant accounting policies as described in the 2025 Annual Report.

Milestone and Royalty Payments Under In-licensing and Other Research & Development Agreements

Under the Company’s in-licensing and other research and development agreements, the Company could be required to pay development, regulatory, and sales-based milestone payments if certain substantive milestones are met. The Company generally expenses development milestones as incurred. For regulatory or sales-based milestones that are associated with an approved asset, the Company capitalizes the milestone payments related to the asset purchase as a finite-lived intangible asset provided that the milestone payment is recoverable based on the Company’s estimated projected cash flows and if the asset has an alternative future use. Such intangible asset is amortized over its estimated useful life on a straight-line basis. The Company assesses the carrying value of its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. Recoverability of finite-lived intangible assets is measured by comparison of the carrying value of the asset to the future undiscounted cash flows the asset is expected to generate.

The Company could also be required to pay royalties based on actual net sales under in-licensing agreements. Such royalties are expensed in the period of sale of the product.

Going Concern

At each reporting period, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company is required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by the Company’s plans or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern.

The Company’s evaluation entails, among other things, analyzing the results of the Company’s clinical development efforts, license and collaboration agreements as well as the entity’s current financial condition including conditional and unconditional obligations anticipated within a year, and related liquidity sources at the date the financial statements are issued. This is reflected in the Company’s prospective operating budgets and forecasts and compared to the current cash, cash equivalents, and marketable securities balance.

Use of Estimates

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP, which requires it to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, estimates related to revenue recognition, fair value of marketable securities, accrued research and development expenses, liability related to sale of future revenue, derivative liability, income taxes and share-based compensation. Although these estimates are based on the Company’s knowledge of current events and actions it may take in the future, actual results may ultimately differ from these estimates and assumptions.

Recently Issued Accounting Standard Updates

In November 2024, the FASB issued ASU-2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The guidance in ASU 2024-03 is intended to require more detailed disclosures about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.

Other recent accounting pronouncements issued, but not yet effective, are not expected to be applicable to the Company or have a material effect on the consolidated financial statements upon future adoption.

3. MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS

Marketable Securities

The Company’s marketable securities consisted of the following as of June 30, 2026 and December 31, 2025:

As of June 30, 2026, the Company considers the unrealized losses in its investment portfolio to be temporary in nature and not due to credit losses. The Company has the intent and ability to hold such investments until their recovery at fair value. The Company didnot have any realized gains or losses in its available-for-sale securities during the three and six months ended June 30, 2026 and 2025. The Company didnot have any sales of marketable securities during the three and six months ended June 30, 2026 and 2025. The contractual maturity dates of the Company’s investments are all less than 36 months. While the Company may hold securities with stated maturities greater than one year, all available-for-sale securities are considered available to support current operations, and thus are classified as current assets.

Fair Value Measurements

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis:

The fair value of the Company’s Level 1 cash equivalents is based on quoted market prices in active markets with no valuation adjustment. The fair value of the Company’s Level 2 cash equivalents and marketable securities, consisting of securities with original maturities of three months or less and 36 months or less, respectively, are determined through third-party pricing services. The amortized cost of cash equivalents approximates the fair value. There have been no impairments of the Company’s assets measured and carried at fair value during the three and six months ended June 30, 2026 and 2025. In addition, there were no changes in valuation techniques or transfers between Level 1, Level 2 and Level 3 financial assets during the three and six months ended June 30, 2026 and 2025.

For information on the fair value of the derivative liability, see Note 7, Purchase and Sale of the Revenue Participation Right.

The Company believes the terms of its liability related to the sale of future revenue, net, which was entered into in October 2025, reflects current market conditions for instruments with similar terms and maturity, therefore, the carrying value approximates its fair value based on Level 3 of the fair value hierarchy.

4. INTANGIBLE ASSET, NET

As a result of the approval of veligrotug by the FDA in June 2026, the Company was required to pay AbbVie, Inc. (formerly ImmunoGen, Inc., “ImmunoGen”) a milestone payment of $10.0 million (see Note 8, Collaborations and License Agreements). The gross carrying amount of the intangible asset is $10.0 million, which is being amortized over approximately 12 years from the approval date. The amount is also included in accrued liabilities in the condensed consolidated balance sheet as of June 30, 2026. The estimated future amortization expense as of June 30, 2026 for the remaining periods in the next five years and thereafter is as follows:

5. ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

6. DEBT

Convertible Notes

In May 2026, the Company completed a public offering of $250.0 million aggregate principal amount of its 1.75% convertible senior notes due 2032 (the “Notes”), including the exercise in full of the underwriters’ option to purchase up to an additional $25.0 million aggregate principal amount of the Notes. The Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of May 11, 2026, between the Company and U.S. Bank Trust Company, National Association, as trustee.

The Notes are general, unsecured, senior obligations of the Company. The Notes will accrue interest payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2026, at a rate equal to 1.75% per year. In addition, special interest will accrue on the Notes upon the occurrence of certain events relating to the Company’s failure to file certain reports with the SEC as provided in the Indenture. The Notes will mature on May 15, 2032, unless earlier converted, redeemed or repurchased by the Company.

Noteholders may convert their Notes at their option only in the following circumstances: (1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on September 30, 2026, if the last reported sale price per share of the Company’s common stock, $0.01 par value per share, exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during thefive consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “Measurement Period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of the common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the common stock, as described in the Indenture; (4) if the Company calls such Notes for redemption; and (5) at any time from, and including, February 15, 2032 until the close of business on the scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, based on the applicable conversion rate. The initial conversion rate is 40.5680 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $24.65 per share, and is subject to adjustment as described in the Indenture.

The Notes are not redeemable prior to May 20, 2030. On or after May 20, 2030, the Company may redeem the Notes for cash (subject to certain limitations set forth in the Indenture) if the last reported sale price per share of the common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. However, the Company may not redeem less than all of the outstanding Notes unless at least $75.0 million aggregate principal amount of Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice.

As of June 30, 2026, the Notes are classified as a long-term liability on the condensed consolidated balance sheets and presented net of unamortized debt discount and issuance costs of $7.8 million. The issuance costs are amortized to interest expense over the contractual term of the Notes. As of June 30, 2026, the effective interest rate of the Notes is 2.32%.

The outstanding balance of the Notes as of June 30, 2026 consisted of the following:

As of June 30, 2026, the estimated fair value of the Notes was approximately $271.1 million. The fair value was determined based on the quoted price of the Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy.

Loan and Security Agreement with Hercules Capital, Inc.

In April 2022, the Company entered into a loan and security agreement (the “Hercules Loan and Security Agreement”) among the Company, certain of its subsidiaries from time to time party thereto (together with the Company, collectively, the “Borrower”), Hercules Capital, Inc. (“Hercules”) and certain other lenders named therein (the “Lenders”). Under the Hercules Loan and Security Agreement, the Lenders provided the Borrower with access to a term loan with an aggregate principal amount of up to $75.0 million, infour tranches, including an initial tranche of $25.0 million. Upon signing the Hercules Loan and Security Agreement, the Borrower drew an initial principal amount of $5.0 million. The Borrower was originally obligated to make interest-only payments through April 1, 2024, which was extended to October 1, 2024 upon the achievement of a development milestone in August 2022.

In August 2023, the Borrower executed the first amendment to the Hercules Loan and Security Agreement (the “Hercules First Amendment”). The Hercules First Amendment was determined to substantially alter the Hercules Loan and Security Agreement and therefore was accounted for as a debt extinguishment. Under the Hercules First Amendment, the maturity date was extended to October 1, 2026 and the Lenders provided the Borrower access to an increased term loan with an aggregate principal amount of up to $150.0 million, infour tranches, consisting of (i) an initial tranche of $50.0 million, $25.0 million of which was available through December 15, 2023 and $25.0 million of which was available from July 1, 2024 through December 15, 2024; (ii) a second tranche of $20.0 million, subject to achievement of certain regulatory milestones, which was available through February 15, 2025; (iii) a third tranche of $20.0 million, subject to achievement of certain regulatory milestones, which was available through March 31, 2025; and (iv) a fourth tranche of $60.0 million subject to approval by the Lenders’ investment committee(s), which was available through June 15, 2025. Upon execution of the Hercules First Amendment, the Borrower drew an additional principal amount of $15.0 million, increasing the cumulative amount drawn to $20.0 million. The obligations of the Borrower under the Hercules First Amendment agreement were secured by substantially all of the assets of the Borrower, excluding the Borrower’s intellectual property.

In October 2025, the Borrower executed a second amendment (the “Hercules Second Amendment”) to the Hercules Loan and Security Agreement. Under the Hercules Second Amendment, the term loan facility was amended to extend the maturity date to October 1, 2030 and provide an aggregate principal amount of up to $300.0 million, consisting of (i) an initial tranche of $100.0 million (“Tranche 1”), comprised of $30.0 million drawn upon execution of the Hercules Second Amendment, increasing the cumulative amount drawn to $50.0 million, $25.0 million (“Tranche 1B”) available through September 15, 2026, and $25.0 million available from the earlier to occur of the expiration or full funding of Tranche 1B through December 15, 2026, (ii) a second tranche of $50.0 million (“Tranche 2”), subject to achievement of certain regulatory milestones, available from (A) the earlier to occur of the full draw of Tranche 1 and December 15, 2025 through (B) the earlier to occur of June 15, 2027 and the date that is 60 days following such achievement of such regulatory milestones (the “Tranche 2 Expiration Date”), (iii) a third tranche of $50.0 million (“Tranche 3”), subject to achievement of certain regulatory milestones, available from (A) the earlier to occur of the full draw of Tranche 2 and the Tranche 2 Expiration Date through (B) the earlier to occur of June 15, 2027 and the date that is 60 days following such achievement of such regulatory milestones (the “Tranche 3 Expiration Date”), (iv) a fourth tranche of $50.0 million, subject to achievement of a certain revenue milestone, available from (A) the earlier to occur of the full draw of Tranche 3 and the Tranche 3 Expiration Date through (B) March 15, 2028, and (v) a fifth tranche of $50.0 million, subject to approval by the Lenders’ investment committee(s), available through October 1, 2030. The milestones for Tranche 2, Tranche 3 and Tranche 4 have not yet been achieved. The obligations of the Borrower under the Hercules Second Amendment are secured by substantially all of the assets of the Borrower.

In May 2026, using proceeds received from the issuance of the Notes described above, the Company and Hercules entered into a payoff letter for a voluntary prepayment with respect to the Hercules Loan and Security Agreement (the “Payoff Letter”). Pursuant to the Payoff Letter, the Company paid a total of $55.1 million (the “Payoff Amount”) to Hercules, representing the outstanding principal, accrued and unpaid interest, fees, costs and expenses due to Hercules under the Hercules Loan and Security Agreement and related loan documents (collectively, the “Hercules Facility”), in repayment of the Company’s outstanding obligations and thereby terminated the Hercules Facility. The Company recorded a loss on extinguishment of debt of $4.1 million under "Other Income (Expense), net" in the Consolidated Statement of Operations and Comprehensive Loss for the three and six months ended June 30, 2026 related to the write-off of the remaining balance of unamortized debt discount. Upon receipt by Hercules of the Payoff Amount on May 27, 2026, all obligations, covenants, debts and liabilities of the Company under the Hercules Facility were satisfied and discharged in full, and the Hercules Facility was terminated.

7. PURCHASE AND SALE OF THE REVENUE PARTICIPATION RIGHT

Liability Related to the Sale of Future Revenue

In October 2025, the Company and DRI Healthcare Acquisitions LP (“DRI”) entered into a Purchase and Sale Agreement of revenue participation right (the “DRI Purchase and Sale Agreement”), pursuant to which DRI purchased rights to certain revenue streams in the U.S. from the Company in exchange for up to $300.0 million in consideration, including $55.0 million paid at signing and conditional payments consisting of: (i) $25.0 million that is payable following the achievement of certain milestones with respect to the Company’s elegrobart pivotal phase 3 clinical trials, REVEAL-1 and REVEAL-2, on or before a specified date; (ii) $75.0 million that is payable following receipt of marketing approval for veligrotug from the FDA on or before a specified date; (iii) $15.0 million that is payable if the events set forth in the foregoing clauses (i) and (ii) are met; (iv) $50.0 million that is payable following receipt of marketing approval for elegrobart from the FDA on or before a specified date; (v) at the Company’s election, $50.0 million that is payable following the Company’s achievement of net sales of certain products equal to or exceeding $1.1 billion on or before a specified date; and (vi) an additional $30.0 million that may be payable to the Company at a time and pursuant to financial terms agreed upon by the Company and DRI at such time.

The DRI Purchase and Sale Agreement contains customary representations, warranties and indemnities of the Company and DRI and customary covenants on the part of the Company, as well as a limit on the amount of incurrence of certain types of indebtedness, which limit automatically terminates a certain period of time following receipt of marketing approval for veligrotug in the U.S. The DRI Purchase and Sale Agreement requires the Company to pay tiered royalties to DRI based on net sales of veligrotug, elegrobart and certain other related products (the “Net Sales Royalties”). The royalties consist of (i)7.5% of annual U.S. net sales up to and including $600 million, which royalties could increase to low-double digits if marketing approval for elegrobart is not received prior to a specified date, (ii)0.8% of annual U.S. net sales above $600 million and up to and including $900 million, (iii)0.25% of annual U.S. net sales above $900 million and up to $2 billion, and (iv) no royalty owed for annual U.S. net sales in excess of $2 billion. The DRI Purchase and Sale Agreement may only be terminated upon repayment by the Company of a certain multiplier of the consideration paid to the Company by DRI (less payments by the Company to DRI to date) on or prior to a certain date or repayment by an acquirer of the Company of a certain multiplier of the consideration paid by DRI to the Company, less payments by the Company to DRI to date, following a change of control of the Company.

The Company determined that the DRI Purchase and Sale Agreement is considered a sale of future revenues and is treated as a financing liability according to ASC 470, Debt, based on the specific facts and circumstances including the Company’s significant continuing involvement in the generation of the cash flows due to DRI. The sale of future revenue liability is accounted for as debt and is recorded at cost. After initial recognition of the debt instrument, the Company will use the effective interest method to account for the amount recorded as debt on its balance sheet. The effective interest rate is the rate that equates the present value of the estimated future cash flows with the carrying amount of the liability related to the sale of future revenue. The estimate of future cash flows includes estimated future Net Sales Royalties to be paid to DRI and the receipt of conditional payments from DRI that were deemed probable of achievement at inception. The interest rate on this financing liability may vary during the term of the agreement depending on a number of factors, including the Company’s net sales forecast and the probability of achieving certain milestones. The Company evaluates the interest rate used to amortize the liability related to the sale of future revenue quarterly based on its expectations of future net sales and current market conditions using the prospective method. A significant increase or decrease in actual or forecasted net sales or changes in expected achievement of certain milestones may materially impact the liability, interest expense, and the time period for repayment. The conditional payments represent loan commitments that are not treated as freestanding financial instruments and qualify for the derivative scope exception under ASC 815, Derivatives and Hedging, and therefore have not been bifurcated and accounted for separately.

Upon receipt of the $55.0 million payment from DRI at the close of the DRI Purchase and Sale Agreement, the Company recorded a liability related to the sale of future revenue of $32.4 million, net of the proportionate debt issuance costs allocated to it and the initial fair value of the bifurcated derivative liability. Following the FDA approval of veligrotug in June 2026, the Company became entitled to receive a $75.0 million milestone payment pursuant to the DRI Purchase and Sale Agreement. Accordingly, the Company recognized a receivable of $75.0 million, which is included in “Other receivables” in the condensed consolidated balance sheet as of June 30, 2026. The milestone payment was subsequently received in July 2026. The Company accrued $2.6 million and $4.4 million in interest expense during the three and six months ended June 30, 2026. As of June 30, 2026, no payments of Net Sales Royalties to DRI have been made or accrued. As of June 30, 2026, the net carrying amount of the liability related to the sale of future revenue was $113.6 million. The imputed effective annual interest rate for the liability related to the sale of future revenue was 27.4% as of June 30, 2026. During the first quarter of 2026, the Company did not achieve certain milestones with respect to the Company’s elegrobart pivotal phase 3 clinical trials and therefore is not eligible to receive the $25.0 million conditional milestone payment or the additional $15.0 million conditional milestone payment.

The following table summarizes the activity of the liability related to the sale of future revenue for the six months ended June 30, 2026 (in thousands):

Derivative Liability

In the event of a change of control of the Company at, or prior to, January 1, 2035, the DRI Purchase and Sale Agreement provides the Company an option to repurchase, and DRI an option to require the Company to repurchase, the revenue participation right from DRI (the “Put/Call Option”). Upon exercise of the Put/Call Option by the Company or DRI, the DRI Purchase and Sale Agreement will terminate, and the Company will become obligated to pay the applicable multiplier of the consideration paid to the Company by DRI to date, less the payments of Net Sales Royalties paid to DRI by the Company to date.

The Put/Call Option is an embedded derivative pursuant to ASC 815, Derivatives and Hedging, that must be bifurcated and measured at fair value initially and at each subsequent reporting period. The Company estimated the fair value of the derivative liability using a “with-and-without” method, which involves determining the fair value of the entire financial liability instrument, inclusive of all terms, features, and conditions, and separately determining the fair value of the financial liability instrument excluding the derivative. The difference between the fair value of the entire financial liability instrument including the derivative and the fair value of the financial liability instrument excluding the derivative represents the fair value of the derivative liability.

The estimated probability and timing of a change in control event that triggers the exercisability of the Put/Call Option, the estimated cash flows and the discount rate used are Level 3 significant unobservable inputs used to determine the fair value of the derivative liability. Management concluded the probability of exercise of the Put/Call Option to be remote. The estimated market yield used to measure the fair value of the derivative was 15.7% and 11.5% as of June 30, 2026 and December 31, 2025, respectively. The initial fair value allocated to the derivative liability as of the close of the DRI Purchase and Sale Agreement was $19.3 million. Issuance costs of $1.8 million allocated to the derivative were recorded to expense as a component of other expense, net in the consolidated statements of operations and comprehensive loss. The derivative liability is subsequently remeasured at fair value each reporting period, with changes in fair value being recorded as a component of other expense, net in the consolidated statements of operations and comprehensive loss. As of June 30, 2026, the fair value of the derivative liability was $13.7 million resulting in recognition of a decrease in fair value of $6.3 million during the six months ended June 30, 2026.

The following table presents the activity of the derivative liability for the six months ended June 30, 2026 (in thousands):

8. COLLABORATION AND LICENSE AGREEMENTS

License Agreement with Zenas BioPharma, Inc.

In October 2020, the Company entered into a license agreement with Zenas BioPharma (Cayman) Limited (now Zenas BioPharma, Inc., its successor in interest, “Zenas BioPharma”) to license technology comprising certain materials, patent rights, and know-how to Zenas BioPharma. Subsequently, the Company entered into several letter agreements to assist Zenas BioPharma with its development activities and a manufacturing development and supply agreement to manufacture and supply, or to have manufactured and supplied, clinical drug product for Zenas BioPharma’s development activities. These agreements (collectively, the “Zenas Agreements”) were negotiated with a single commercial objective and are treated as a combined contract for accounting purposes. Under the terms of the Zenas Agreements, the Company granted Zenas BioPharma an exclusive license to develop, manufacture, and commercialize certain IGF-1R directed antibody products for non-oncology indications in the greater area of China.

As consideration for the Zenas Agreements, the transaction price included upfront non-cash consideration and variable consideration in the form of payment for the Company’s goods and services and milestone payments due upon the achievement of specified events. Under the Zenas Agreements, the Company can receive non-refundable milestone payments upon achieving specific milestone events during the contract term. Additionally, the Company may receive royalty payments based on a percentage of the annual net sales of any licensed products sold on a country-by-country basis in the greater area of China throughout the royalty term. The royalty percentage may vary based on different tiers of annual net sales of the licensed products made.

While the Zenas Agreements are in the scope of ASC 808, Collaborative Arrangements, the Company applied ASC 606, Revenue from Contracts with Customers, to account for certain activities related to the Company’s transfer of a good or service (i.e., a unit of account) that is part of the Company’s ongoing major or central operations. The Company allocated the transaction price based on the relative estimated standalone selling prices of each performance obligation or, in the case of certain variable consideration, to one or more performance obligations. Research and development activities are priced generally at cost. The Company’s license of goods and services to Zenas BioPharma during the contract term was determined to be a single performance obligation satisfied over time. The Company will recognize the transaction price from the license agreement over the Company’s estimated period to complete its activities.

At the inception of the arrangement, the Company evaluated whether the milestones were considered probable of being reached and estimated the amount to be included in the transaction price using the most likely amount method. As it was not probable that a significant revenue reversal would not occur, none of the associated milestone payments were included in the transaction price at contract inception. For the sales-based royalties included in the arrangement, the license was deemed to be the predominant item to which the royalties relate. The Company will recognize royalty revenues at the later of when the related sales occur or when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

In January 2025, Zenas BioPharma sublicensed their rights under the license agreement to Zai Lab (Hong Kong) Limited (“Zai Lab”) and assigned to them the manufacturing development and supply agreement.

In July 2025, the Company entered into a side agreement with Zai Lab (the “Side Agreement”), with Zenas BioPharma as countersigner, pursuant to which the Company agreed to provide certain services directly to Zai Lab to support development and commercialization activities. Under the Side Agreement, the Company will charge Zai Lab a fixed hourly rate for services, plus reimbursement of out-of-pocket costs. In August 2025, the Company entered into a material transfer agreement (the “MTA”) with Zai Lab, to supply certain materials for clinical trial use in exchange for a fixed payment. The Side Agreement and MTA were evaluated under ASC 606, Revenue from Contracts with Customers, and determined to be contract modifications to the Zenas Agreements. The services provided under the Side Agreement and materials provided under the MTA to Zai Lab as a sublicensee of Zenas BioPharma are not distinct from those in the Zenas Agreements, as they are integral to the research and development activities enabled by the original license and therefore do not represent a separate performance obligation. As a result, the modifications do not meet the criteria to be accounted for as separate contracts.

During the three and six months ended June 30, 2026, the Company recognized $0.1 million and $0.2 million, respectively, of collaboration revenue related to the Zenas Agreements, Side Agreement and MTA. During the three and six months ended June 30, 2025, the Company recognized $0.1 million and $0.1 million, respectively, of collaboration revenue related to the Zenas Agreements, Side Agreement and MTA.

The Zenas Agreements are considered related party transactions because Fairmount Funds Management LLC (“Fairmount”) beneficially owns more than 5% of the Company’s capital stock and a member of Fairmount has a seat on Zenas BioPharma’s board of directors. The Side Agreement and MTA with Zai Lab are also considered related party transactions of the Company because Zenas BioPharma has determined Zai Lab is its related party.

Antibody and Discovery Option Agreement with Paragon Therapeutics, Inc.

In January 2022, the Company and Paragon Therapeutics, Inc. (“Paragon”) entered into an antibody and discovery option agreement (the “Paragon Research Agreement”) under which the Company and Paragon will cooperate to develop one or more proteins or antibodies. Under the terms of the Paragon Research Agreement, Paragon will perform certain development activities in accordance with an agreed upon research plan, and the Company will pay Paragon agreed upon development fees in exchange for Paragon’s commitment of the necessary personnel and resources to perform these activities. The Paragon Research Agreement stipulates a final deliverable to the Company consisting of a report summarizing the experiments and processes performed under the research plan (the “Final Deliverable”).

Additionally, Paragon agreed to grant the Company an option for an exclusive license to all of Paragon’s right, title and interest in and to certain antibody technology and the Final Deliverable, and a non-exclusive license to certain background intellectual property owned by Paragon solely to research, develop, make, use, sell, offer for sale and import of the licensed intellectual property and resulting products worldwide (each, an “Option” and together, the “Options”). Paragon also granted to the Company a limited, exclusive, royalty-free license, without the right to sublicense, to certain antibody technology and the Final Deliverable, and a non-exclusive, royalty-free license without the right to sublicense, under certain background intellectual property owned by Paragon, solely to evaluate the antibody technology and Option and for the purpose of allowing the Company to determine whether to exercise the Option with respect to certain programs. The Company may, at its sole discretion, exercise the Option with respect to specified programs (“Programs”) at any time until the date that is 90 days after the Company’s receipt of the Final Deliverable for the applicable program, or such longer period as agreed upon by the parties (“Option Period”) by delivering written notice of such exercise to Paragon. If the Company fails to exercise an Option prior to expiration of the applicable Option Period, such Option for such Programs will terminate.

In October 2023, the Company entered into a License Agreement with Paragon (the “Paragon License Agreement”) as a result of exercising its Option under the Paragon Research Agreement to obtain exclusive licenses to develop, manufacture and commercialize certain antibodies, proteins and associated products.

In September 2024, the Company entered into the Amended and Restated License Agreement with Paragon (the “Amended Paragon License Agreement”) which amended and restated the Paragon License Agreement. In consideration for rights granted by Paragon, the Company is obligated to make certain future milestone payments of up to $16.0 million on a program-by-program basis upon the achievement of specified clinical and regulatory milestones, with total milestone payments under all programs not to exceed $40.0 million. Additionally, if the Company develops a product utilizing certain intellectual property rights granted to it under the Amended Paragon License Agreement, the Company is obligated to pay Paragon potential additional future development milestone payments of up to $3.1 million and commercial milestone payments of up to $17.0 million with respect to such product. If the Company successfully commercializes any product candidate subject to the Amended Paragon License Agreement, it is responsible for royalty payments equal to a percentage in the mid-single digits of such product’s net sales.

During the three and six months ended June 30, 2026, the Company recorded $0.0 million and $1.5 million, respectively, in research and development costs related to the Paragon Research Agreement and Amended Paragon License Agreement (collectively, the “Paragon Agreements”), of which $0.5 million remained unpaid as of June 30, 2026. During the three and six months ended June 30, 2025, the Company recorded $0.0 million and $4.5 million, respectively, in research and development costs related to the Paragon Agreements.

The Paragon Agreements are considered related party transactions because Fairmount beneficially owns more than 5% of the Company’s capital stock and beneficially owns more than 5% of Paragon’s capital stock, which is a joint venture between Fairmount and FairJourney Biologics, has appointed the sole director on Paragon’s board of directors and has the contractual right to approve the appointment of any executive officers.

Collaboration and License Agreement with Kissei Pharmaceutical Co., Ltd.

In July 2025, the Company and Kissei Pharmaceutical Co., Ltd. (“Kissei”) entered into a Collaboration and License Agreement (the “Kissei Agreement”) pursuant to which the Company granted to Kissei an exclusive license to develop and commercialize products containing veligrotug and elegrobart for potential treatments, including treatment of TED, in Japan, and a non-exclusive license to manufacture such licensed products worldwide for use in Japan under certain limited circumstances.

The transaction price under the Kissei Agreement included a one-time, non-refundable and non-creditable upfront cash payment to the Company of $70.0 million. Additionally, the Company is eligible to receive up to an additional $315.0 million of non-refundable milestone payments upon achieving specific milestone events during the contract term, as well as tiered royalty payments ranging from percentages in the twenties to the mid-thirties based on the annual net sales of any licensed products sold in Japan. Kissei is obligated to make royalty payments to the Company for the royalty term as defined in the Kissei Agreement.

The term of the Kissei Agreement will continue until expiration of the last to expire payment obligations, unless terminated earlier. Kissei has the right to terminate the Kissei Agreement for convenience with written notice of certain periods. The Company may terminate the Kissei Agreement under certain conditions. In addition, either party may terminate the Kissei Agreement for the other party’s material breach or insolvency.

The Company evaluated the Kissei Agreement in accordance with ASC 606, Revenue from Contracts with Customers, and concluded that the contract counterparty, Kissei, is a customer. The Company evaluated the promised goods and services within the Kissei Agreement and determined which goods and services were separate performance obligations. The Company determined the Kissei Agreement hadtwo performance obligations: granting the exclusive licenses to develop and commercialize veligrotug and granting the exclusive license to develop and commercialize elegrobart. The performance obligations were satisfied concurrently at a point in time upon the granting of the license rights at contract inception.

At the inception of the arrangement, the Company evaluated whether the milestones were considered probable of being reached and estimated the amount to be included in the transaction price using the most likely amount method. As it was not probable that a significant revenue reversal would not occur, none of the associated milestone payments were included in the transaction price at contract inception. For the sales-based royalties included in the arrangement, the license was deemed to be the predominant item to which the royalties relate. The Company will recognize royalty revenues at the later of when the related sales occur or when the performance obligation to which some or all of the royalty has been allocated has been satisfied. Under the Kissei Agreement, the Company may manufacture and provide clinical supply to Kissei to use in development and commercialization in the licensed territory for consideration, as defined within the Kissei Agreement. Certain of these provisions were determined to be options to acquire additional goods or services at a price that approximates the stand-alone selling price for that good or service and therefore do not represent material rights, or separate performance obligations, within the context of the Kissei Agreement.

License Agreement with ImmunoGen, Inc.

In October 2020, the Company entered into a license agreement (the “ImmunoGen License Agreement”) with Immunogen, under which the Company obtained an exclusive, sublicensable, worldwide license to certain patents and other intellectual property rights to develop, manufacture, and commercialize certain products for non-oncology and non-radiopharmaceutical indications. In consideration for rights granted by ImmunoGen, the Company is obligated to make certain future development milestone payments of up to $48.0 million upon the achievement of specified clinical and regulatory milestones. Additionally, if the Company successfully commercializes any product candidate subject to the ImmunoGen License Agreement, it is responsible for royalty payments equal to a percentage in the mid-single digits of net sales and commercial milestone payments of up to $95.0 million. The Company is obligated to make any such royalty payments on a product-by-product and country-by-country basis from the first commercial sale of a specified product in each country until the later of (i) the expiration of the last patent claim subject to the ImmunoGen License Agreement in such country, (ii) the expiration of any applicable regulatory exclusivity obtained for each product in such country, or (iii) the 12th anniversary of the date of the first commercial sale of such product in such country. On February 12, 2024, AbbVie Inc. acquired ImmunoGen. The terms of the ImmunoGen License Agreement did not change as a result of this acquisition.

Following the FDA’s approval of veligrotug in June 2026, the Company incurred a $10.0 million milestone payment obligation pursuant to the ImmunoGen License Agreement, which was not paid prior to June 30, 2026. Accordingly, the Company recognized a corresponding liability of $10.0 million, which is included in “Accrued liabilities” in the condensed consolidated balance sheet as of June 30, 2026.

For both the three and six months ended June 30, 2026, a $10.0 million milestone was met pursuant to the ImmunoGen License Agreement. For both the three and six months ended June 30, 2025, there wereno milestones met pursuant to the ImmunoGen License Agreement.

Development and License Agreement with Enable Injections

In January 2023, the Company entered into a Development and License Agreement (the “Enable License Agreement”) with Enable Injections, Inc. (“Enable”), under which Enable granted to the Company an exclusive, royalty-bearing, sublicensable, non-transferrable license to develop, commercialize, seek marketing approval for and otherwise use and exploit certain products and make and have made such product solely for such permitted uses. Pursuant to the terms of the Enable License Agreement, the Company granted Enable a non-exclusive, royalty-free, non-sublicensable, non-transferable license. In January 2023, in consideration for the rights granted by Enable, the Company paid Enable an initial, non-creditable, non-refundable license fee of $15.0 million. In February 2026, the Company and Enable amended the Enable License Agreement to include a second product for additional consideration.

The Company is obligated to make certain future milestone payments of up to $49.0 million upon the achievement of specified development, clinical and regulatory milestones. Additionally, if the Company is successful in commercializing any product candidate subject to the Enable License Agreement, the Company is obligated to make certain commercial milestone payments of up to $150.0 million and royalty payments equal to a percentage in the mid-single digits. In July 2026, a $5.0 million milestone was met under the Enable License Agreement.

9. COMMITMENTS AND CONTINGENCIES

Manufacturing Agreement

In May 2026, the Company entered into a commercial manufacturing services agreement with WuXi Biologics (Hong Kong) Limited (“WuXi”), for the non-exclusive commercial manufacture of the Company’s veligrotug drug substance and drug product (the “WuXi Commercial Supply Agreement”). The WuXi Commercial Supply Agreement has an initial five-year term and automatically renews for successive five-year periods unless either party provides written notice of non-renewal at leasttwo years prior to the expiration of the then-current term.

Under the WuXi Commercial Supply Agreement, each month the Company is required to provide WuXi with a rolling forecast schedule detailing batch volume requirements for veligrotug drug substance and drug product. The volume requirements are binding for a period oftwelve months with respect to drug substance andnine months with respect to drug product. In addition to service fees, the Company is required to pay variable pass-through costs based on costs incurred by WuXi to procure materials in connection with the manufacturing services. As of June 30, 2026, the Company had outstanding non-cancelable purchase commitments of approximately $14.1 million under the agreement.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to its vendors, lessors, contract research organizations (“CROs”), business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims.

Legal Proceedings

The Company, from time to time, may be party to litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the three months ended June 30, 2026 and, to the best of its knowledge, no material legal proceedings are currently pending or threatened.

Payments Upon Termination

The Company enters into contracts in the normal course of business with CROs, contract development and manufacturing organizations (“CDMOs”) and other third parties for preclinical studies, clinical trials and manufacturing services. These contracts typically do not contain minimum purchase commitments and are generally cancelable by the Company upon written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including noncancelable obligations of the Company's service providers, up to the date of cancellation and, in the case of certain arrangements with CROs and CDMOs, may include noncancelable fees. Under such agreements, the exact amounts owed by the Company in the event of termination will be based on the timing of the termination and the exact terms of the agreement. As of June 30, 2026, the Company has not recognized any amounts related to these contingencies as the amount and timing of such payments are not fixed and estimable.

10. CAPITAL STOCK

Public Offering

In May 2026, the Company entered into an underwriting agreement with Jefferies LLC, Leerink Partners LLC and Goldman Sachs & Co. LLC, relating to the offer and sale of 8,455,883 shares of the Company’s common stock, which included 1,102,941 shares of common stock issued in connection with the exercise in full by the underwriters of their option to purchase additional shares at a public offering price of $17.00 per share. The aggregate gross proceeds to the Company were approximately $143.8 million, before deducting underwriting discounts and commissions and other offering expenses payable by the Company.

ATM Agreement

In March 2025, the Company entered into an Open Market Sale Agreement SM (the “March 2025 ATM Agreement”) with Jefferies LLC (“Jefferies”), pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $300.0 million from time to time at prices and on terms to be determined by market conditions at the time of offering, with Jefferies acting as its sales agent. Jefferies will receive a commission of up to 3.0% of the gross proceeds of any shares of common stock sold under the March 2025 ATM Agreement. No shares were sold under the March 2025 ATM Agreement during the three and six months ended June 30, 2026 and 2025.

11. SHARE-BASED COMPENSATION

Equity Incentive Plans

The Company has grants outstanding under its amended and restated 2016 Equity Incentive Plan (the “2016 Plan”) and its 2020 Equity Incentive Plan (the “2020 Plan” and collectively with the 2016 Plan, the “Equity Incentive Plans”). Additionally, beginning in July 2021, the Company granted stock options and restricted stock units (“RSUs”) outside of its Equity Incentive Plans to certain employees to induce them to accept employment with the Company (the “Inducement Awards”). The terms and conditions of the Inducement Awards are substantially similar to those awards granted under the Company’s Equity Incentive Plans. In June 2022, the Company’s stockholders approved the amendment and restatement of the 2016 Plan to, among other things, transfer the then remaining number of shares available for issuance under the 2020 Plan into the 2016 Plan so that the Company operates from a single equity plan going forward. The 2016 Plan will terminate in April 2035.

As of June 30, 2026, the Company had the following balances by plan:

Restricted Stock Units

RSUs granted under the Equity Incentive Plans and the Inducement Awards generally vest annually over atwo orfour-year period and are settled in shares of the Company’s common stock.

A summary of RSU activity is as follows:

Stock Options

Options granted under the Equity Incentive Plans and the Inducement Awards have an exercise price equal to the market value of the common stock at the date of grant and expire 10 years from the date of grant. Options generally vest 25% on the first anniversary of the vesting commencement date and 75% ratably in equal monthly installments over the remaining 36 months or in equal monthly or quarterly amounts over periods of up to 48 months.

A summary of common stock option activity is as follows:

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

The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2026 and 2025 was $6.8 million and $1.2 million, respectively. The total fair value of options vested during the six months ended June 30, 2026 and 2025 was $24.3 million and $22.0 million, respectively. The tax benefit from the exercise of options eligible for a tax deduction realized during the six months ended June 30, 2026 and 2025 was $2.4 million and $0.2 million, respectively.

Fair Value Assumptions

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options granted under its equity compensation plans. The Black-Scholes model requires inputs for risk-free interest rate, dividend yield, volatility, and expected terms of the options. Because the Company has a limited history of stock purchase and sale activity, expected volatility is based on a blend of historical data from public companies that are similar to the Company in size and nature of operations, as well as the Company’s own volatility. The Company will continue to use similar entity volatility information until its historical volatility is relevant to measure expected volatility for option grants. The Company accounts for forfeitures as they occur. The risk-free rate for periods within the contractual life of each option is based on the U.S. Treasury yield curve in effect at the time of the grant for a period commensurate with the expected term of the grant. The expected term (without regard to forfeitures) for options granted represents the period of time that options granted are expected to be outstanding and is derived from the contractual terms of the options granted, and actual and expected option-exercise behaviors. The fair value of the underlying common stock is based on the closing price of the common stock on The Nasdaq Capital Market at the date of grant.

The weighted-average grant-date fair value of options granted during the six months ended June 30, 2026 and 2025 was $17.29 and $10.34, respectively. The fair value was determined by the Black-Scholes option pricing model using the following weighted-average assumptions:

Employee Stock Purchase Plan

In June 2025, the Company’s stockholders approved the 2025 Employee Stock Purchase Plan (“2025 ESPP”). The 2025 ESPP allows qualified employees to purchase shares of common stock at a price equal to 85% of the lower of: (i) the closing price on the first day of the offering period or (ii) the closing price on the purchase date. As of June 30, 2026, the Company had 1,907,158 shares available for issuance. There were 92,842 shares issued as of June 30, 2026. During the three and six months ended June 30, 2026, the Company recognized $0.2 million and $0.3 million, respectively, in related stock-based compensation expense.

Share-Based Compensation Expense

Share-based compensation related to all equity awards issued pursuant to the Equity Incentive Plans, the Inducement Awards, and for estimated shares to be issued under the 2025 ESPP for the purchase periods active during each respective period is included in the unaudited condensed consolidated statements of operations and comprehensive loss as follows:

As of June 30, 2026, the Company had $127.2 million of total unrecognized share-based compensation costs related to stock options, which the Company expects to recognize over a weighted-average remaining period of 2.86 years. As of June 30, 2026, the Company had $34.9 million of total unrecognized share-based compensation costs related to unvested RSUs, which the Company expects to recognize over a weighted-average remaining period of 3.31 years.

12. NET LOSS PER SHARE

The Company computes net loss per share of common stock, Series A convertible preferred stock, and Series B convertible preferred stock using the two-class method required for multiple classes of common stock and other participating securities. The two-class method is an earnings (loss) allocation method under which earnings (loss) per share is calculated for each class of common stock. The Company has determined that the Series A convertible preferred stock and Series B convertible preferred stock do not have preferential rights when compared to the Company's common stock and therefore it must allocate losses to these other classes of stock, as illustrated in the table below.

Basic and diluted net loss per share is computed by dividing the allocated net loss to each share class by the weighted-average number of shares outstanding during the period. For periods in which the Company generated a net loss, the Company does not include potential shares of common stock in diluted net loss per share when the impact of these items is anti-dilutive. The Company has generated a net loss for all periods presented, therefore diluted net loss per share is the same as basic net loss per share since the inclusion of potential shares of common stock would be anti-dilutive.

The following table sets forth the computation of basic and diluted net loss per share of common stock, Series A convertible preferred stock, and Series B convertible preferred stock (in thousands, except share and per share amounts):

There are no potentially dilutive securities to Series A convertible preferred stock or Series B convertible preferred stock. Potentially dilutive securities to the common stock include the following:

13. SEGMENT INFORMATION

The Company manages its operations asone operating segment, focused on discovering, developing and commercializing potential best-in-class medicines for autoimmune and rare diseases. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The CODM reviews and evaluates consolidated net loss for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods. Operating expenses are used to monitor budget versus actual results. As the Company’s operations comprise of a single reporting segment, the segment assets are reflected on the accompanying consolidated balance sheet as “total assets.” All tangible assets are physically located within the United States. Segment asset information is not used by the CODM to allocate resources.

Significant segment expenses, as provided to the CODM, are presented below:

(a) Share-based payment expense of $7,336 and $5,173 related to research and development and $9,648 and $5,671 related to selling, general and administrative have been excluded for the three months ended June 30, 2026 and 2025, respectively, and included within share-based compensation expense. Share-based payment expense of $13,170 and $10,921 related to research and development and $17,204 and $10,143 related to selling, general and administrative have been excluded for the six months ended June 30, 2026 and 2025, respectively, and included within share-based compensation expense.

(b) Other items consist primarily of collaboration revenue, interest income, interest expense and depreciation expense.