Veradermics, Inc

1. Nature of the Business

Veradermics, Incorporated and its wholly-owned subsidiary (collectively, the “Company” or “Veradermics”) is a dermatologist-founded, late clinical-stage biopharmaceutical company focused on developing innovative therapeutics to address pervasive treatment challenges in highly prevalent aesthetic and dermatological conditions. The Company’s initial focus is developing better treatments for pattern hair loss, or PHL, a condition affecting approximately 50 million men and approximately 30 million women in the United States. Beyond VDPHL01, the Company has created a portfolio utilizing its real-world experience as dermatologists to generate compelling pipeline assets, including VDMN for the treatment of common warts, VDAA for the treatment of alopecia areata, and VDMC for the treatment of molluscum contagiosum.

Veradermics began its operations in 2019 as a company incorporated under the laws of the State of Texas. Effective on September 14, 2021, the Company was converted into a company incorporated under the laws of the State of Delaware. The Company is headquartered in New Haven, Connecticut.

On February 5, 2026, the Company completed its initial public offering (“IPO”) of 17,339,294 shares of common stock, par value $0.00001, at a public offering price of $17.00 per share, including 2,261,647 shares issued upon the exercise in full of the underwriters’ over-allotment option to purchase additional shares. The Company raised gross proceeds of approximately $294.8 million and net proceeds of approximately $269.1 million after deducting underwriting discounts, commissions, and offering expenses. Upon completion of the IPO, all outstanding shares of convertible preferred stock automatically converted into 19,250,410 shares of common stock. The Company’s common stock is listed on the New York Stock Exchange under the ticker symbol “MANE.”

In May 2026, the Company completed its underwritten public offering (the “Follow-On Public Offering”) of 4,420,358 shares of the Company’s common stock, par value $0.00001 per share, at a public offering price of $100.00 per share, including 576,568 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares. The gross proceeds from the Follow-On Public Offering were approximately $442.0 million and net proceeds of approximately $414.3 million after deducting underwriting discounts, commissions, and offering expenses.

In May 2026, the Company closed a private placement (the “Private Placement”) pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), dated April 29, 2026, among the Company and certain entities affiliated with Montanova Capital (formerly known as Suvretta Capital) (each, an “Investor” and collectively, the “Investors”), in which the Company sold to the Investors pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 300,000 shares of common stock, at an offering price of $99.99999 per Pre-Funded Warrant. The gross proceeds of the Private Placement were approximately $30.0 million and net proceeds of approximately $28.1 million after deducting placement agent fees and other expenses. In August 2026, the Investors exercised the Pre-Funded Warrants, purchasing 300,000 shares of common stock at an exercise price of $0.00001 per share.

Liquidity and Ability to Continue as a Going Concern

The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, 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 has incurred recurring losses since its inception, including net losses of $71.7 million and $48.1 million for the nine months ended September 30, 2026 and 2025, respectively, as well as incurred negative cash flows from operations of $58.6 million and $48.0 million, respectively. In addition, as of September 30, 2026, the Company had an accumulated deficit of $195.2 million. The Company expects to continue to generate operating losses for the foreseeable future. Through September 30, 2026, the Company has financed its operations primarily from the sale of equity securities. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional capital to fund its operations.

As of September 30, 2026, we had $798.4 million in cash, cash equivalents and marketable securities. We expect our existing cash, cash equivalents and marketable securities will enable the Company to meet its obligations for at least the twelve-month period from the date the financial statements are available to be issued.

Risks and Uncertainties

The Company is subject to risks and uncertainties common to early-stage companies in the pharmaceutical industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and those specific to the pharmaceutical industry such as the U.S. Food and Drug Administration (“FDA”), and the ability to secure additional capital to fund operations. Products currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure, and extensive compliance and reporting capabilities. The Company’s future clinical trials require significant compliance and monitoring by government agencies and there can be no assurances that such agencies will approve procedures followed in the Company’s trials. Another likely scenario is that such agencies would require additional procedures to be performed which would push out commercialization timing. Further, even if the Company's product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

If the Company’s product development efforts are successful, they are subject to significant risks and uncertainties related to product commercialization and launch, including being unable to secure additional funding to support the Company’s commercial launch efforts. Additionally, the Company’s potential product would compete in the market of medical dermatology. The industry is subject to technology advancements as well as being affected by political conditions which could impact the market’s reimbursement and regulatory policy, and by economic conditions surrounding availability and affordability of health insurance and access to health services. The pharmaceutical industry is heavily regulated by the need for approval in order to sell a product, to reimbursement policy for use of the product, and how companies can and cannot interact and sell to physicians or hospitals.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted (“U.S. GAAP”) in the United States. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and ASUs promulgated by the Financial Accounting Standards Board (“FASB”).

In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position and the results of its operations for the interim periods presented.

On January 27, 2026, the Company effected a 1-for-10.067 reverse stock split of the Company’s issued and outstanding common stock and adjusted the conversion ratio of the Company’s outstanding convertible preferred stock. Accordingly, all share and per share amounts for all common stock in the periods presented have been retroactively adjusted, where applicable, to reflect the reverse stock split and the adjustment of the preferred stock conversion ratios.

Principles of Consolidation

The accompanying financial statements include the accounts of the Company and the Company’s subsidiary, which the Company controls. Accordingly, all intercompany balances and transactions between these entities have been eliminated within the financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Actual results could differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: valuation of prepaid and accrued expenses related to certain research and development contracts, and share-based compensation expense which includes estimating the fair value of its common stock.

Significant accounting policies

The significant accounting policies used in preparation of these condensed consolidated financial statements are consistent with those discussed in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements for the year ended December 31, 2025 included in the Company’s 2025 annual report on Form 10-K (the “Annual Report”), except for the following:

Stock-Based Compensation Expense

Prior to the IPO, the Company did not meet the criteria to apply the simplified method for determining the expected term of stock option grants under the Black-Scholes option pricing model. Following the completion of its IPO in the first quarter of 2026, the Company elected to adopt the simplified method for stock option grants issued subsequent to the IPO. Under this method, the expected term is calculated as the midpoint between the vesting term and the contractual term of the award.

Common stock warrants

The Company determines the accounting classification of warrants that are issued, as either liability or equity, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (“ASC 480-10”) and then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock(“ASC 815-40”). Under ASC 480-10, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the issuer to settle the warrants or the underlying shares by paying cash or other assets, or must or may require settlement by issuing a variable number of shares.

If warrants do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable U.S. GAAP. After all relevant assessments are made, the Company concludes whether the warrants are classified as liability or equity. Liability classified warrants are required to be accounted for at fair value both on the date of issuance and on subsequent accounting period ending dates, with all changes in fair value after the issuance date recorded in the statements of operations as a gain or loss. Equity classified warrants are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date.

When calculating basic and diluted net loss per share, the Company includes the shares of common stock issuable upon the exercise of warrants that are exercisable for little or no consideration in the weighted average number of common shares outstanding during the period.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (“ASU 2024-03”). ASU 2024-03 requires disclosure of additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. The standard is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with prospective or retrospective application and early adoption permitted. The Company is currently evaluating the impact ASU 2024-03 will have on its financial statements.

3. Prepaid Expenses, Other Current Assets, and Accrued Expenses

Prepaid expenses and other current assets consist of the following:

Accrued expenses consists of the following:

4. Available-for-sale debt securities

The amortized cost and fair value of our available-for-sale debt securities by type of security as of September 30, 2026 are as follows:

The amortized cost and fair value of our available-for-sale debt securities by type of security as of December 31, 2025 are as follows:

There were no transfers between levels within the fair value hierarchy during the periods presented.

The fair values of available-for-sale debt securities, by classification, included in the condensed consolidated balance sheets as of September 30, 2026 and December 31, 2025 are as follows:

As of September 30, 2026 and December 31, 2025, the amounts shown for marketable securities on our condensed consolidated balance sheets are inclusive of $4.7 million and $0.9 million of earned interest receivable, respectively.

The amortized cost and fair value of available-for-sale debt securities as of September 30, 2026 and December 31, 2025, by contractual maturity, are summarized as follows:

The aggregate fair value of available-for-sale debt securities in an unrealized loss position as of September 30, 2026 and December 31, 2025 was $770.2 million and $9.6 million, respectively. The Company had no realized gains or losses during the nine months ended September 30, 2026 or 2025. As of September 30, 2026 and December 31, 2025, the Company believes that the cost basis of our available-for-sale debt securities is recoverable and no allowance for credit losses was recorded.

5. Stockholders’ Equity – Common and Preferred Stock

Common Stock

On December 22, 2025, the Company amended its certificate of incorporation, whereby the Company increased shares of common stock it was authorized to issue to 267.5 million shares of common stock, par value $0.00001 per share, of which 253.4 million were designated as voting common stock and 14.1 million were designated as non-voting common stock. Each share of non-voting common stock was convertible, at the option of the holder thereof, at any time, and without the payment of additional consideration by the holder thereof, into one fully paid and nonassessable share of voting common stock. The Company hadno outstanding shares of non-voting common stock as of December 31, 2025. Upon the consummation of the IPO, the Company restated its certificate of incorporation, and as of February 5, 2026, the Company was authorized to issue 200.0 million shares of common stock, par value $0.00001 per share, of which no shares were designated as non-voting common stock and 25.0 million shares of preferred stock, par value $0.00001 per share. The voting, dividend and liquidation rights of the holders of the common stock are subject to and qualified by the rights, power, and preferences of the preferred stockholders.

As of September 30, 2026 and December 31, 2025, a total of 42,185,678 and 749,760 shares of common stock were issued and outstanding, respectively. An aggregate of 2,089,809 shares and 316,668 shares of common stock were reserved for the granting of stock-based compensation under the Company’s 2026 Equity Incentive Plan (the “2026 Plan”) and 2026 Employee Stock Purchase Plan (the “2026 ESPP”), respectively, as of September 30, 2026.

The holders of the common stock are entitled toone vote for each share of common stock held at all meetings of stockholders (and written actions in lieu of meetings), and there are no cumulative voting rights. The number of authorized shares of common stock may be increased or decreased by the affirmative vote of the holders of common stock of the Company; however, the issuance of common stock may be subject to the vote of the holders of one or more series of preferred stock that may be required by terms of the Fifth Amended and Restated Certificate of Incorporation.

Preferred Stock

Preferred stock outstanding as of December 31, 2025 consisted of the following:

In connection with the Series A4 Preferred Stock Purchase Agreement, the Company increased the number of shares of common stock authorized from 18,000,000 to 25,500,000 under the Second Amended and Restated Certificate of Incorporation dated as of April 13, 2023.

In connection with the Series B Preferred Stock Purchase Agreement, the Company increased the number of shares of common stock authorized from 25,500,000 to 98,774,582 under the Third Amended and Restated Certificate of Incorporation dated as of November 22, 2024.

In connection with the Series C Preferred Stock Purchase Agreement, the Company increased the number of shares of common stock authorized from 98,774,582 to 267,466,797 under the Fourth Amended and Restated Certificate of Incorporation dated as of December 22, 2025.

Immediately prior to the completion of the IPO on February 5, 2026, all outstanding shares of the Company’s Series A1, A2, A3, A4, B and C preferred stock automatically converted into an aggregate of 19,250,410 shares of common stock.

Collectively, the shares of Series A1, A2, A3 and A4 preferred stock are referred to as “Series A preferred stock.” The Series B and C preferred stock are referred to as “Senior preferred stock.” The following terms detailed below for the Series A, B and C preferred stock are documented in the Company’s Fourth Amended and Restated Certificate of Incorporation dated as of December 22, 2025 and other equity-related documents and reflect the rights, preferences and privileges of holders of preferred stock prior to conversion into common stock upon the closing of the IPO:

Conversion

Each share of Series A, Series B and Series C preferred stock, at the option of the holder, was convertible into a number of fully paid and non-assessable common shares as determined by multiplying the number of shares of Series A, Series B and Series C preferred stock being converted by the applicable conversion rate. The conversion rate in effect at any time was determined by dividing the preferred stock issue price by the conversion price in effect at that time. The conversion price applicable (all adjusted for the reverse stock split) to the Series A1 preferred stock was equal to $28.963 per share, the conversion price applicable to the Series A2 preferred stock was equal to $21.7226 per share, the conversion price applicable to the Series A3 preferred stock was equal to $28.963 per share, the conversion price applicable to the Series A4 preferred stock was equal to $30.4104 per share, the conversion price applicable to the Series B preferred stock was equal to $12.1297 per share and the conversion price applicable to the Series C preferred stock was equal to $12.8082 per share. Such initial conversion price, and the rate at which shares of preferred stock may be converted into common stock, was subject to adjustment. See Note 2 for information on the reverse stock split that adjusted the preferred stock conversion ratio.

The Series A, Series B and Series C preferred stock would automatically convert to common stock either upon the closing of a public offering of the Company's common stock at a price of at least 1.2 times the conversion price, noted above, resulting in aggregate proceeds of at least $100.0 million, or upon the written election of a majority of the holders of Senior preferred stock.

Dividends

The Series B and Series C preferred stock contained cumulative dividend rights at the annual rate of 12%, if and when declared by the board of directors (the “Board”), such that the Series B and Series C preferred stockholders, acting as one class, shall first receive, or simultaneously receive, preferential dividends as calculated under the terms of the Company’s Third Amended and Restated Certificate of Incorporation prior to Series A and common stockholders receiving any declared dividend. Since inception, no dividends have been declared or paid on the Series B or Series C preferred stock. In connection with the IPO, all outstanding preferred stock converted into common stock. As a result of the conversion, approximately $17.0 million of cumulative undeclared dividends were extinguished.

The Series A preferred stock contained non-cumulative dividend rights at the annual rate of 8%, if and when declared by the Board, such that the holders of the preferred stock, acting as one class, shall receive, or simultaneously receive, preferential dividends as calculated under the terms of the Company’s certificate of incorporation prior to common stockholders receiving any declared dividend. As of December 31, 2025, no dividends had been declared by the Board.

Deemed Liquidation Event

Certain transactions were defined as Deemed Liquidation Events, unless waived by the holders of a majority of the outstanding preferred stock. These events generally include a merger or consolidation involving the Company, the sale or disposition of all or substantially all of the Company’s assets, a SPAC transaction, or a merger or other business combination with a public company. Transactions in which existing stockholders retain a majority of the voting power of the surviving entity are not considered Deemed Liquidation Events.

Liquidation Preference

In the event of any liquidation, dissolution, or winding up of the Company, the Senior preferred stockholders were entitled to receive prior to, and in preference to, any distribution to the Series A preferred and common stockholders, an amount equal to the greater of the applicable Original Issue Price per share plus accrued but unpaid dividends whether or not declared, or such amount per share as would have been payable had all shares of Senior preferred stock been converted to shares of common stock immediately prior to such event of liquidation, dissolution or winding up. In the event that upon liquidation or dissolution, if the assets and funds of the Company were insufficient to permit the payment to preferred stockholders of the full preferential amounts, then the entire assets and funds of the Company legally available for distribution would be distributed ratably among the Senior preferred stockholders in proportion to the full preferential amount each was otherwise entitled to receive.

Following the completion of the distributions to the Senior preferred stockholders, the Series A preferred stockholders were entitled to receive prior to, and in preference to, any distribution to the common stockholders, an amount equal to the greater of the applicable Original Issue Price per share plus accrued but unpaid dividends declared, or such amount per share as would have been payable had all shares of Series A preferred stock been converted to shares of common stock immediately prior to such event of liquidation, dissolution or winding up. In the event that upon liquidation or dissolution, if the assets and funds of the Company were insufficient to permit the payment to preferred stockholders of the full preferential amounts, then the entire assets and funds of the Company legally available for distribution were to be distributed ratably among the Series A preferred stockholders in proportion to the full preferential amount each was otherwise entitled to receive. After the distributions described above had been paid in full, the remaining assets of the Company available for distribution would be distributed pro-rata to the common stockholders.

Voting Rights

Each Series A, Series B and Series C preferred stockholder was entitled to the number of votes equal to the number of shares of voting common stock into which such holder's shares were convertible.

Series B Preferred Stock Modification

In connection with the closing of the Company’s Series C preferred stock financing in the fourth quarter of 2025, the Company amended the terms of its Series B convertible preferred stock pursuant to the amended and restated certificate of incorporation. The amendment decreased the liquidation preference of the Series B preferred stock fromtwo toone times the original issuance price per share.

The change in liquidation preference represented a modification of the economic rights associated with the Series B preferred stock. The Company determined that the modification was substantive, and accounted for the transaction as an extinguishment and new issuance of the Series B preferred stock at fair value as of the modification date which resulted in an adjustment of approximately $4.2 million. In accordance with ASC 718-20, the Company recorded this amount as a non-cash adjustment to Series B preferred stock within mezzanine equity and retained earnings. The modification did not involve the issuance of additional shares or the receipt or payment of cash by the Company.

Because the modification represented a reallocation of value among the Company’s preferred shareholders and did not represent a distribution to or from common stockholders, the adjustment did not affect net loss attributable to common shareholders. Accordingly, the modification had no impact on basic or diluted net loss per share for the year ended December 31, 2025.

Pre-funded warrants

In May 2026, the Company closed the Private Placement pursuant to the Purchase Agreement, dated April 29, 2026, among the Company and the Investors, in which the Company sold 300,000 Pre-Funded Warrants to purchase shares of its common stock at an offering price of $99.99999 per Pre-Funded Warrant. The aggregate gross proceeds before deducting placement agent fees and other expenses was approximately $30.0 million.

As the Pre-Funded Warrants were indexed to the Company’s common stock, and otherwise met the requirements to be classified in equity, the Company recorded the consideration received from the issuance of the Pre-Funded Warrants as additional paid-in capital on the Company’s consolidated balance sheets. The Pre-Funded Warrants were exercisable at any time. The exercise price of each Pre-Funded Warrant equaled $0.00001 per underlying share of common stock. The exercise price and the number of shares of common stock issuable upon exercise of each Pre-Funded Warrant was subject to appropriate adjustment in the event of certain stock dividends, stock splits, stock combinations, or similar events affecting the common stock. The Pre-Funded Warrants were exercisable in cash or by means of a cashless exercise and did not expire until the date the Pre-Funded Warrants were fully exercised.

The Pre-Funded Warrants could not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof (together with its affiliates) immediately following such exercise would have exceeded 9.99% of the Company’s common stock; provided, however, that a holder could increase or decrease the beneficial ownership limitation by giving written notice to the Company, but not to any percentage in excess of 19.99%, and any such increase would not be effective until the 61st day after such notice was delivered to the Company.

In August 2026, the Investors exercised the Pre-Funded Warrants, purchasing 300,000 shares of common stock at an exercise price of $0.00001 per share. As of September 30, 2026, there wereno Pre-Funded Warrants outstanding.

6. Net Loss Per Common Share

Basic and diluted net loss per common share was calculated as follows:

Basic net loss per common share is calculated by dividing the net loss, adjusted for the unpaid cumulative Series B and Series C preferred stock dividends, by the weighted-average number of shares of common stock outstanding during the period. Diluted loss per share is computed by dividing net loss for the period by the weighted-average number of shares of common stock and common stock equivalents outstanding (unless their effect is anti-dilutive) for the period. Common share equivalents include shares issuable upon the exercise of stock options and the conversion of preferred stock. During the three and nine months ended September 30, 2026 and 2025, convertible preferred stock on an as if converted basis, unexercised options, restricted stock units, and estimated shares issuable under the current ESPP offering period have been excluded as their effect is antidilutive. There were no other potentially dilutive, unissued shares of common stock for the three and nine months ended September 30, 2026 and 2025. The Company had no outstanding non-voting common stock as of September 30, 2026 and 2025.

The Company reported net losses for each of the three and nine months ended September 30, 2026 and 2025 and therefore excluded all options, restricted stock units, convertible preferred stock, and estimated shares issuable under the current ESPP offering period from the computation of diluted net loss per common share as their inclusion would have had an antidilutive effect, as summarized below:

As described further in Note 5, Stockholders’ Equity – Common and Preferred Stock, in May 2026, the Company sold to Investors Pre-Funded Warrants to purchase 300,000 shares of the Company’s common stock at an exercise price of $0.00001 per share. The weighted-average number of common shares outstanding used in the basic and diluted net loss per share calculations includes the weighted-average effect of the Pre-Funded Warrants as of the May 2026 date of issue, as the Pre-Funded Warrants were exercisable at any time for nominal cash consideration. As noted above, in August 2026, the Investors exercised the Pre-Funded Warrants, purchasing 300,000 shares of common stock at an exercise price of $0.00001 per share.

7. Stock-Based Compensation

The Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”) to grant option awards to its officers, directors and employees as compensation for their services to the Company. In the fourth quarter of 2025, the Board approved increases to the aggregate shares of common stock available for issuance under the 2021 Plan from 771,832 shares to 4,411,143 shares.

Stock option awards under the 2021 Plan were to be issued at an exercise price of not less than 100% of the fair market value of the voting common stock at the date of the grant. The 2021 Plan was administered by the Board, which had the authority to grant awards, interpret the plan and related agreements, establish rules and regulations, and make all other determinations necessary for its administration. The Board could delegate these powers to a committee. Stock option awards granted under the 2021 Plan generally vest over 36 or 48 months, with 33.3% or 25% vestingone year after the grant date and the remainder vesting in equal monthly installments over the following 24 or 36 months, respectively.

In connection with the IPO in the first quarter of 2026, the Board adopted, and the stockholders approved, the 2026 Plan, which superseded the 2021 Plan. The 2026 Plan had an initial share pool of 4,032,751 shares available to be granted. Stock option awards granted under the 2026 Plan generally vest over 48 months, with 25% vestingone year after the grant date and the remainder vesting in equal monthly installments over the following 36 months. Restricted stock units granted under the 2026 Plan generally vest over four years in equal annual installments. Additionally, in connection with the IPO, the Board adopted, and the stockholders approved, the 2026 ESPP, with an initial share pool of 316,668 shares available to be granted.

During the three months ended September 30, 2026 and 2025, the Company recognized stock-based compensation expense of $4.1 million and $0.1 million, respectively. During the nine months ended September 30, 2026 and 2025, the Company recognized stock-based compensation expense of $12.9 million and $0.5 million, respectively. Stock-based compensation expense for the three and nine months ended September 30, 2026 and 2025 was allocated as follows:

Stock option awards grants in 2025 included 543,635 performance-based stock option awards with both a market condition and a performance condition made in the fourth quarter of 2025. The performance-based stock option awards were earned based upon achievement of specified corporate milestones, including a performance condition related to the completion of the Company’s initial public offering and a market condition related to attainment of certain post-IPO market capitalization levels. The weighted average grant date fair value of awards subject to both a market condition and a performance condition was $5.13. The Company achieved these milestones in the first quarter of 2026, resulting in the full vesting of the awards and recognition of $2.8 million in stock-based compensation in the first quarter of 2026.

In connection with the IPO in the first quarter of 2026, stock option awards to purchase an aggregate of 1,705,791 shares of common stock with time-based vesting conditions were granted to employees and members of the Company’s Board with a weighted average grant date fair value of $12.58.

8. Commitments and Contingencies

From time to time, in the ordinary course of business, the Company is subject to litigation and regulatory examinations as well as information gathering requests, inquiries and investigations. As of September 30, 2026 and December 31, 2025, there were no matters which would have a material impact on the Company’s financial results.

In July 2022, the Company entered into a license agreement to which the Company was granted intellectual property rights in certain technology, to develop, manufacture and commercialize such technology related to the advancement of its VDMC asset. The Company is required to make development and regulatory milestone payments up to $3.3 million and commercial and sales milestone up to $16.0 million. The Company is also required to pay annual single-digit royalties on net product sales over the term of the license agreement. As of September 30, 2026, it is not practicable to estimate the future payments of any such milestone payments or royalties that may arise due to the clinical stage of development of VDMC.

9. Development and Manufacturing Agreement and Master Service Agreement

Master Service Agreement

In September 2020, the Company entered into a Master Service Agreement (the “MSA”) with Therapeutics, Inc. (“TI”). The MSA provides the terms and conditions upon which the Company may engage TI for the purpose of managing the preclinical and clinical development of its products in the field of dermatology, and other related services or projects, by executing work orders specifying the details of the service and the related terms and conditions. The MSA automatically renews for additional 1-year terms until the MSA is terminated upon written notice. Either party may terminate a work order for material breach (subject to a cure period) and the Company may terminate any work order for any reason on 90 days’ written notice, subject to payment of fees earned and expenses payable, in addition to a termination fee equal to a low-double-digit percentage of the remaining work order budget. As of September 30, 2026, there are no outstanding work order cancellation fees.

During the three months ended September 30, 2026 and 2025, the Company recognized research and development expense of $8.0 million and $13.0 million, respectively, in connection with the MSA. During the nine months ended September 30, 2026 and 2025, the Company recognized research and development expense of $27.7 million and $29.7 million, respectively, in connection with the MSA. As of September 30, 2026 and December 31, 2025, the Company has deposits with TI of $9.2 million and $8.5 million, respectively and net prepaid balances with TI of $4.6 million and $4.1 million, respectively. These are included in prepaid expenses and other current assets on its condensed consolidated balance sheets.

Collaboration Agreement

In September 2020, the Company entered into a Collaboration Agreement with TI, pursuant to which TI serves as the exclusive provider of certain clinical trial management, regulatory, and related CRO services through completion of Work Order Number One of the MSA noted herein. In connection with the agreement, the Company issued TI an unsecured convertible promissory note with a principal amount of approximately $0.5 million, which was converted into 238,008 shares of Series A-2 Preferred Stock in September 2021. The agreement may be terminated by the Company upon payment of a mid-six-figure liquidated damages amount, subject to reduction based on completed in-human clinical studies. As of September 30, 2026, there are no outstanding termination fees.

10. Related Party Transaction

Agreements with Green Line Talent Group LLC

In December 2024, the Company entered into certain talent search agreements with Green Line Talent Group LLC ("Green Line"), one of several third-party recruiting firms the Company engages to support its talent acquisition efforts, pursuant to which the Company retained Green Line to provide end-to-end recruitment services for various roles. Green Line is a related party in accordance with ASC 850, Related Party Disclosures, as a Partner at Green Line is the spouse of the Company's Chief Financial Officer. During the three months ended September 30, 2026 and 2025, the Company paid Green Line $0.4 million and less than $0.1 million, respectively, pursuant to the talent search agreements. During the nine months ended September 30, 2026 and 2025, the Company paid Green Line $0.8 million and $0.1 million, respectively, pursuant to the talent search agreement.

11. Segments

The Company defines its segments on the basis of the way in which internally reported financial information is regularly reviewed by the Chief Operating Decision Maker (“CODM”) to analyze financial performance, make decisions, and allocate resources. The Company’s CODM is the Chief Executive Officer. The Company manages its operations as a single operating and reportable segment and the measure of segment profit or loss is net loss. The CODM uses net loss in the budget and forecasting process and considers budget-to-actual variances on a quarterly basis when making decisions about the allocation of operating and capital resources. The following table summarizes the significant segment expenses presented on the Company's condensed consolidated statements of operations and comprehensive loss:

(1)For the three months ended September 30, 2026, other segment items include interest income of $5.1 million and investment accretion of $2.6 million. For the three months ended September 30, 2025, other segment items include interest income of $0.1 million and investment accretion of $0.1 million. For the nine months ended September 30, 2026 other segment items include interest income of $12.4 million and investment accretion of $4.0 million. For the nine months ended September 30, 2025, other segment items include interest income of $0.7 million and investment accretion of $0.5 million.