{"url_path":"/sec/rntx/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 Financial Statements.","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1420565/0001193125-26-225352-index.html","accession_number":"0001193125-26-225352","cik":"0001420565","ticker":"RNTX","issuer_name":"Rein Therapeutics, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1420565/0001193125-26-225352-index.html","primary_entity_key":"0001420565","primary_entity_name":"Rein Therapeutics, Inc."},"word_count":12600,"has_tables":true,"body_markdown":"Item 1. Financial Statements.\n\nREIN THERAPEUTICS, INC.\n\nCondensed Consolidated BALANCE SHEETS\n\n(UNAUDITED)\n\n(In thousands, except share and per share data)\n\n \n\n \n\n \n\nMarch 31,\n2026\n\n \n\n \n\nDecember 31,\n2025\n\n \n\nAssets\n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent assets:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n$\n\n4,445\n\n \n\n \n\n$\n\n3,215\n\n \n\nPrepaid expenses and other current assets\n\n \n\n \n\n1,008\n\n \n\n \n\n \n\n1,111\n\n \n\nTotal current assets\n\n \n\n \n\n5,453\n\n \n\n \n\n \n\n4,326\n\n \n\nGoodwill\n\n \n\n \n\n6,330\n\n \n\n \n\n \n\n6,330\n\n \n\nIntangible assets\n\n \n\n \n\n13,500\n\n \n\n \n\n \n\n13,500\n\n \n\nOther non-current assets\n\n \n\n \n\n1,005\n\n \n\n \n\n \n\n2\n\n \n\nTotal assets\n\n \n\n$\n\n26,288\n\n \n\n \n\n$\n\n24,158\n\n \n\nLiabilities, Convertible Preferred Stock and Stockholders’ Equity\n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts payable\n\n \n\n$\n\n6,263\n\n \n\n \n\n$\n\n3,976\n\n \n\nAccrued expenses and other current liabilities\n\n \n\n \n\n2,451\n\n \n\n \n\n \n\n2,204\n\n \n\nNotes payable, net\n\n \n\n \n\n4,923\n\n \n\n \n\n \n\n—\n\n \n\nTotal current liabilities\n\n \n\n \n\n13,637\n\n \n\n \n\n \n\n6,180\n\n \n\nDeferred tax liability\n\n \n\n \n\n1,060\n\n \n\n \n\n \n\n1,060\n\n \n\nTotal liabilities\n\n \n\n \n\n14,697\n\n \n\n \n\n \n\n7,240\n\n \n\nCommitments and contingencies (Note 13)\n\n \n\n \n\n \n\n \n\n \n\n \n\nConvertible preferred stock, $0.001 par value, 5,000,000 shares authorized at March 31, 2026 and at December 31, 2025; 24,610 shares issued and 12,232 shares outstanding at March 31, 2026 and at December 31, 2025\n\n \n\n \n\n45,005\n\n \n\n \n\n \n\n45,005\n\n \n\nStockholders’ equity:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCommon stock, $0.001 par value; 100,000,000 shares authorized at March 31, 2026 and at December 31, 2025; 28,039,032 shares and 27,550,222 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively\n\n \n\n \n\n114\n\n \n\n \n\n \n\n113\n\n \n\nAdditional paid-in capital\n\n \n\n \n\n373,643\n\n \n\n \n\n \n\n373,133\n\n \n\nAccumulated other comprehensive loss\n\n \n\n \n\n(62\n\n)\n\n \n\n \n\n(62\n\n)\n\nAccumulated deficit\n\n \n\n \n\n(407,109\n\n)\n\n \n\n \n\n(401,271\n\n)\n\nTotal liabilities, convertible preferred stock and stockholders’ equity\n\n \n\n$\n\n26,288\n\n \n\n \n\n$\n\n24,158\n\n \n\n \n\nThe accompanying notes are an integral part of these unaudited condensed consolidated financial statements.\n\n4\n\n \n\nREIN THERAPEUTICS, INC.\n\nCondensed Consolidated STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS\n\n(UNAUDITED)\n\n(In thousands, except share and per share data)\n\n \n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nRevenue\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\nOperating expenses:\n\n \n\n \n\n \n\n \n\n \n\n \n\nResearch and development\n\n \n\n \n\n3,073\n\n \n\n \n\n \n\n3,054\n\n \n\nGeneral and administrative\n\n \n\n \n\n2,157\n\n \n\n \n\n \n\n2,555\n\n \n\nTotal operating expenses\n\n \n\n \n\n5,230\n\n \n\n \n\n \n\n5,609\n\n \n\nLoss from operations\n\n \n\n \n\n(5,230\n\n)\n\n \n\n \n\n(5,609\n\n)\n\nOther (expense) income, net\n\n \n\n \n\n(608\n\n)\n\n \n\n \n\n108\n\n \n\nNet loss\n\n \n\n$\n\n(5,838\n\n)\n\n \n\n$\n\n(5,501\n\n)\n\nNet loss per share—basic and diluted\n\n \n\n$\n\n(0.19\n\n)\n\n \n\n$\n\n(0.25\n\n)\n\nWeighted average common shares outstanding—basic and diluted\n\n \n\n \n\n30,354,647\n\n \n\n \n\n \n\n21,915,891\n\n \n\nComprehensive loss:\n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n\n$\n\n(5,838\n\n)\n\n \n\n$\n\n(5,501\n\n)\n\nOther comprehensive loss:\n\n \n\n \n\n \n\n \n\n \n\n \n\nUnrealized loss on investments, net of tax of $0\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(45\n\n)\n\nForeign currency translation adjustments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n31\n\n \n\nTotal other comprehensive loss\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(14\n\n)\n\nTotal comprehensive loss\n\n \n\n$\n\n(5,838\n\n)\n\n \n\n$\n\n(5,515\n\n)\n\n \n\nThe accompanying notes are an integral part of these unaudited condensed consolidated financial statements.\n\n5\n\n \n\nREIN THERAPEUTICS, INC.\n\nCondensed Consolidated STATEMENT OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY\n\n(UNAUDITED)\n\n(In thousands, except share data)\n\n \n\n \n\n \n\nSeries X Non-Voting Convertible Preferred Stock\n\n \n\n \n\nCommon Stock\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal Convertible\n\n \n\n \n\n \n\nShares\n\n \n\n \n\nAmount\n\n \n\n \n\nShares\n\n \n\n \n\nAmount\n\n \n\n \n\nAdditional\nPaid-in\nCapital\n\n \n\n \n\nAccumulated\nOther\nComprehensive\nLoss\n\n \n\n \n\nAccumulated\nDeficit\n\n \n\n \n\nPreferred Stock and Stockholders’\nEquity\n\n \n\nBalances at December 31, 2025\n\n \n\n \n\n12,232\n\n \n\n \n\n$\n\n45,005\n\n \n\n \n\n \n\n27,550,222\n\n \n\n \n\n$\n\n113\n\n \n\n \n\n$\n\n373,133\n\n \n\n \n\n$\n\n(62\n\n)\n\n \n\n$\n\n(401,271\n\n)\n\n \n\n$\n\n16,918\n\n \n\nIssuance of common stock\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n488,810\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n354\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n355\n\n \n\nStock-based compensation expense\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n156\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n156\n\n \n\nNet loss\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(5,838\n\n)\n\n \n\n \n\n(5,838\n\n)\n\nBalances at March 31, 2026\n\n \n\n \n\n12,232\n\n \n\n \n\n$\n\n45,005\n\n \n\n \n\n \n\n28,039,032\n\n \n\n \n\n$\n\n114\n\n \n\n \n\n$\n\n373,643\n\n \n\n \n\n$\n\n(62\n\n)\n\n \n\n$\n\n(407,109\n\n)\n\n \n\n$\n\n11,591\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBalances at December 31, 2024\n\n \n\n \n\n12,232\n\n \n\n \n\n$\n\n45,005\n\n \n\n \n\n \n\n21,666,012\n\n \n\n \n\n$\n\n108\n\n \n\n \n\n$\n\n360,697\n\n \n\n \n\n$\n\n(18\n\n)\n\n \n\n$\n\n(351,400\n\n)\n\n \n\n$\n\n54,392\n\n \n\nIssuance of common stock\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n317,772\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n738\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n738\n\n \n\nStock-based compensation expense\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n264\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n264\n\n \n\nExercise of stock options\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n21,533\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nUnrealized loss on short-term investments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(45\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(45\n\n)\n\nForeign currency translation adjustments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n31\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n31\n\n \n\nNet loss\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(5,501\n\n)\n\n \n\n \n\n(5,501\n\n)\n\nBalances at March 31, 2025\n\n \n\n$\n\n12,232\n\n \n\n \n\n$\n\n45,005\n\n \n\n \n\n$\n\n22,005,317\n\n \n\n \n\n$\n\n108\n\n \n\n \n\n$\n\n361,699\n\n \n\n \n\n$\n\n(32\n\n)\n\n \n\n$\n\n(356,901\n\n)\n\n \n\n$\n\n49,879\n\n \n\n \n\nThe accompanying notes are an integral part of these unaudited condensed consolidated financial statements.\n\n6\n\n \n\nREIN THERAPEUTICS, INC.\n\nCondensed Consolidated STATEMENTS OF CASH FLOWS\n\n(UNAUDITED)\n\n(In thousands)\n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nCash flows from operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n\n$\n\n(5,838\n\n)\n\n \n\n$\n\n(5,501\n\n)\n\nAdjustments to reconcile net loss to net cash used in operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nStock-based compensation expense\n\n \n\n \n\n156\n\n \n\n \n\n \n\n264\n\n \n\nNet amortization of discount on notes payable\n\n \n\n \n\n623\n\n \n\n \n\n \n\n—\n\n \n\nChanges in operating assets and liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nPrepaid expenses and other current assets\n\n \n\n \n\n103\n\n \n\n \n\n \n\n(125\n\n)\n\nOther assets\n\n \n\n \n\n(1,003\n\n)\n\n \n\n \n\n(764\n\n)\n\nAccounts payable\n\n \n\n \n\n2,288\n\n \n\n \n\n \n\n238\n\n \n\nAccrued expenses and other current liabilities\n\n \n\n \n\n247\n\n \n\n \n\n \n\n(10\n\n)\n\nOther long-term liabilities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(277\n\n)\n\nNet cash used in operating activities\n\n \n\n \n\n(3,424\n\n)\n\n \n\n \n\n(6,175\n\n)\n\nCash flows from financing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nProceeds from issuance of common stock, net of offering costs\n\n \n\n \n\n354\n\n \n\n \n\n \n\n737\n\n \n\nProceeds from issuance of common stock in connection with stock option exercises\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1\n\n \n\nNotes payable, net\n\n \n\n \n\n4,300\n\n \n\n \n\n \n\n—\n\n \n\nNet cash provided by financing activities\n\n \n\n \n\n4,654\n\n \n\n \n\n \n\n738\n\n \n\nNet increase (decrease) in cash and cash equivalents\n\n \n\n \n\n1,230\n\n \n\n \n\n \n\n(5,437\n\n)\n\nCash and cash equivalents at beginning of period\n\n \n\n \n\n3,215\n\n \n\n \n\n \n\n12,865\n\n \n\nCash and cash equivalents at end of period\n\n \n\n$\n\n4,445\n\n \n\n \n\n$\n\n7,428\n\n \n\n \n\nThe accompanying notes are an integral part of these unaudited condensed consolidated financial statements.\n\n7\n\n \n\nREIN THERAPEUTICS, INC.\n\nNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)\n\n(Amounts in thousands, except share and per share data)\n\n1. Nature of the Business\n\nRein Therapeutics, Inc. (“Company”) is a Delaware corporation formed in August 2001 under the name Renegade Therapeutics, Inc. In February 2007, the Company changed its name to Aileron Therapeutics, Inc. and in January 2025 changed its name to Rein Therapeutics, Inc. The Company is a clinical stage biopharmaceutical company focused on developing novel therapies for the treatment of fibrosis indications with no approved or limited effective treatments. The Company currently has one product candidate in clinical development, LTI-03.\n\nThe Company is a clinical-stage biotechnology company subject to significant risks and uncertainties, including the need for substantial additional financing, reliance on third parties, clinical trial risks, dependence on key personnel, protection of proprietary technology, and compliance with regulatory requirements. Its lead product candidate, LTI-03, is being developed for the treatment of idiopathic pulmonary fibrosis (IPF) and has completed Phase 1a and Phase 1b clinical trials; the Company is currently conducting the Phase 2 RENEW trial, a multi-center, randomized, double-blind, placebo-controlled study expected to enroll approximately 120 patients across multiple global sites, with interim topline data anticipated in the fourth quarter of 2026. The Company initiated patient screening in May 2025, received regulatory clearances in Europe and the United Kingdom, and dosed its first patient in March 2026. The Company’s second product candidate, LTI-01, previously in development for loculated pleural effusion, has been paused indefinitely as the Company prioritizes resources toward LTI-03, and the timing of any potential resumption remains uncertain and dependent on additional financing and the success of LTI-03.\n\nLiquidity and Going Concern\n\nIn accordance with Accounting Standards Update, or ASU, No. 2014-15, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether conditions and events, in the aggregate, raise substantial doubt about its ability to continue as a going concern within one year after the date these condensed consolidated financial statements are issued. This evaluation initially excludes the potential mitigating effects of management’s plans that have not been fully implemented as of the issuance date. If substantial doubt is identified, management then assesses whether its plans alleviate such doubt. Management’s plans are considered only if it is probable that (i) they will be effectively implemented within one year after the issuance date and (ii) they will mitigate the conditions or events giving rise to the substantial doubt. Generally, for plans to be considered probable of implementation, they must be approved prior to the issuance of the financial statements.\n\nThe Company’s unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue to operate as a going concern, which contemplates the continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business.\n\nIn May 2024, the Company completed an underwritten follow-on public offering, or the Offering, pursuant to which the Company issued and sold 4,273,505 shares of the Company’s common stock, par value $0.001 per share, or the Offering Shares, and accompanying warrants, or the Offering Warrants, to purchase 4,273,505 shares of common stock, or the Offering Warrant Shares. The Offering Warrants to purchase 884,798 shares of common stock were exercised in April 2025 as part of April 2025 Transactions (as defined below). As of March 31, 2026, Offering Warrants to purchase 3,388,707 shares of common stock remained outstanding.\n\nIn April 2025, the Company entered into privately negotiated letter agreements with certain holders of the PIPE Warrants, as described in Note 3, and certain holders of the Offering Warrants, who agreed to exercise for cash the PIPE Warrants and the Offering Warrants, or the Warrant Exercises as further discussed in Note 10. The total gross proceeds for the Warrant Exercises were $1,679. Also in April 2025, the Company entered into privately negotiated letter agreements with additional holders of the PIPE Warrants who, in exchange for pre-funded warrants, or the Exchange Pre-Funded Warrants, surrendered PIPE Warrants to the Company for cancellation and made an aggregate cash payment into which the Exchange Pre-Funded Warrants are exercisable, or the Warrant Exchanges as further discussed in Note 10. The total gross proceeds for the Warrant Exchanges were $3,101. In addition, an entity affiliated with Bios Partners, or the Bios Purchaser, purchased additional pre-funded warrants in a private placement, or the Placement Pre-Funded Warrants, pursuant to a subscription agreement underlying the Placement Pre-Funded Warrants, or the Private Placement. Total gross proceeds for the Private Placement were $500. The Warrant Exercises, Warrant Exchanges and Private Placement are collectively referred to as the April 2025 Transactions. The total net proceeds from the April 2025 Transactions was $5,082.\n\nOn May 15, 2025, the Company entered into an “at the market offering” agreement, or the Wainwright Sales Agreement, with H.C. Wainwright & Co., LLC, or H.C. Wainwright, as agent and/or principal, pursuant to which the Company could offer and sell shares of its common stock having an aggregate offering price of up to $13,702 from time to time through or to H.C. Wainwright by any method permitted that is deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. As of March 31, 2026, the Company had issued and sold 1,296,777 shares of common stock pursuant to the Wainwright Sales Agreement for total net proceeds of $1,844, after deducting transaction fees of $67 paid by the Company. In July\n\n8\n\n \n\n2025, in connection with the Yorkville Transactions, the Company reduced the aggregate offering price of the shares of common stock that could be offered and sold under the Wainwright Sales Agreement to $8,067.\n\nPrior to entering into the Wainwright Sales Agreement, in May 2025, the Company terminated the equity distribution agreement, dated July 26, 2024, or the Equity Distribution Agreement, with Citizens JMP Securities, LLC, or Citizens JMP, as agent and/or principal, under which the Company could offer and sell up to $50,000 of shares of its common stock from time to time through or to Citizens JMP by any method that was deemed an “at the market” offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. In January 2025, the Company issued and sold 317,772 shares of common stock pursuant to the Equity Distribution Agreement for total net proceeds of $712, after deducting transaction fees of $22 paid by the Company. The Company did not issue or sell any other shares of common stock pursuant to the Equity Distribution Agreement during the quarter ended March 31, 2026. The Company did not sell any shares of common stock pursuant to the Equity Distribution Agreement during the year ended December 31, 2025.\n\nIn July 2025, the Company entered into a Pre-Paid Advance Agreement, or the PPA, and a Standby Equity Purchase Agreement, or the SEPA, with YA II PN, Ltd., a Cayman Islands exempt limited partnership, or Yorkville. The PPA and the SEPA are collectively referred to as the Yorkville Transactions. In accordance with the terms of the PPA, the Company may request pre-paid advances of up to $6,000 from Yorkville (each, a “Pre-Paid Advance”) over a 12-month period, subject to certain limitations and conditions set forth in the PPA. Each Pre-Paid Advance will be purchased by Yorkville at 95% of the face amount of the Pre-Paid Advance. At any time there is an outstanding balance under any Pre-Paid Advances, Yorkville may provide written notice requiring the Company to issue and sell shares of its common stock to Yorkville, which shall be offset against and reduce the amounts outstanding under the Pre‑Paid Advances. An initial Pre-Paid Advance of $1,000 was purchased on July 29, 2025 by Yorkville, or the First Advance, for net proceeds of $950. On September 8, 2025, Yorkville purchased a second Pre-Paid Advance, or the Second Advance, of $1,000, for which the Company received net proceeds of $950. On October 23, 2025, Yorkville purchased a third Pre-Paid Advance, or the Third Advance, of $1,000, for which the Company received net proceeds of $950. As of March 31, 2026, Yorkville has converted the entire initial Pre‑Paid Advance, in the aggregate amount of $1,007 of principal and accrued interest, into 953,765 shares of the Company’s common stock, at a weighted average price per share of approximately $1.056, converted the Second Advance, in the aggregate amount of $1,004 of principal and accrued interest, into 927,107 shares of the Company’s common stock, at a weighted average price per share of approximately $1.082, and converted the Third Advance, in the aggregate amount of $1,001 of principal and accrued interest, into 846,290 shares of the Company’s common stock, at a weighted average price per share of approximately $1.183. Separately, under the SEPA, the Company may sell up to $15,000 of its common stock to Yorkville over a 36-month term. The Company has the sole discretion to initiate such sales, subject to volume and pricing limitations. In connection with entry into the SEPA, the Company paid Yorkville a $300 commitment fee through the issuance of 213,099 shares of common stock and paid $25 in structuring and legal fees. As of the date of this report, the Company has not elected to sell any shares of common stock to Yorkville under the SEPA. In December 2025, the Company elected to terminate the PPA and SEPA.\n\nIn January 2026 and February 2026, the Company entered into securities purchase agreements with certain institutional investors pursuant to which the Company issued unsecured promissory notes (the “Notes”). The Notes had an aggregate principal amount of approximately $5,375 and were issued for aggregate net proceeds of $4,300, reflecting an original issue discount of approximately 20%.\n\nIn May 2026, the Company completed an underwritten public offering of 57,500,000 shares of its common stock at a public offering price of $1.00 per share, or the May 2026 Offering. Aggregate gross proceeds from the May 2026 Offering were $57,500, and net proceeds to the Company were approximately $53,106 after deducting underwriting discounts, commissions, and offering expenses of approximately $4,394.\n\nManagement believes that, based on the Company’s current operating plan, the Company’s cash and cash equivalents of $4,445 as of March 31, 2026, together with the net proceeds received by the Company in the May 2026 Offering, will be sufficient to enable the Company to fund its planned operating expense and capital expenditure requirements into the first quarter of 2028. The Company believes that the funds are sufficient to enable the Company to complete the Phase 2 RENEW clinical trial of LTI-03. The Company’s estimate as to how long it expects its existing cash and cash equivalents to be able to continue to fund its operations is based on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than it currently expects.\n\nSince its inception, the Company has not generated any revenue from product sales and has never generated an operating profit. The Company has incurred significant losses on an aggregate basis. The Company’s net losses were $5,838 and $5,501 for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company had an accumulated deficit of $407,109. These losses have resulted primarily from costs incurred in connection with research and development activities, licensing and patent investment and general and administrative costs associated with the Company’s operations. The Company expects to continue to incur operating losses for the foreseeable future. The Company expects to finance its operations primarily through utilization of its current financial resources and through the sale of additional equity or debt financings, collaborations, licensing arrangements or other sources.\n\nThe Company could use its available capital resources sooner than it currently expects. The Company’s future viability is dependent on its ability to raise additional capital, enter into a financing, consummate a successful acquisition, merger, business combination, or a sale of assets or other transaction. If the Company becomes unable to continue as a going concern, it may have to\n\n9\n\n \n\nliquidate its assets and the values it receives for its assets in liquidation or dissolution could be significantly lower than the values reflected in its consolidated financial statements.\n\n2. Summary of Significant Accounting Policies\n\nBasis of Presentation\n\nThe accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and as amended by ASUs of the Financial Accounting Standards Board, or FASB.\n\nPrinciples of Consolidation\n\nThe accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Lung Therapeutics, LLC, Lung Therapeutics Australia Pty Ltd, and Lung Therapeutics Limited. Lung Therapeutics Limited is currently inactive. All intercompany balances and transactions have been eliminated in consolidation.\n\nUse of Estimates\n\nThe preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual for research and development expenses, the prepaid research and development expenses, valuation of intangibles and goodwill, the valuation of warrants, and the value of stock-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.\n\nForeign Currency Transactions\n\nThe functional currency for the Company’s wholly owned foreign subsidiary, Lung Therapeutics Australia Pty Ltd., is the United States dollar. All foreign currency transaction gains and losses are recognized in the consolidated statements of operations and comprehensive loss.\n\nUnaudited Interim Financial Information\n\nThe accompanying unaudited condensed consolidated financial statements as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission, or the SEC, for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report for the year ended December 31, 2025 that was filed with the SEC on March 26, 2026 (the “Annual Report”).\n\nThe unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2026, the results of its operations for the three months ended March 31, 2026 and 2025 and its cash flows for the three months ended March 31, 2026 and 2025. The financial data and other information disclosed in these notes related to the three months ended March 31, 2026 and 2025 are unaudited. The results for the three months ended March 31, 2026 are not necessarily indicative of results to be expected for the year ending December 31, 2026, any other interim periods, or any future year or period. The accompanying balance sheet as of December 31, 2025 has been derived from the Company’s audited consolidated financial statements for the year ended December 31, 2025 included in the Company’s Annual Report.\n\nThe Company’s significant accounting policies are described in Note 2 to the consolidated financial statements included in the Annual Report.\n\nNotes Payable\n\nThe Company accounts for notes payable in accordance with applicable guidance under ASC 470, Debt. Notes payable are initially recorded at their principal amount, net of any unamortized discounts, premiums, and issuance costs. Discounts to the notes, including those arising from warrants, beneficial conversion features, or original issue discounts, are recorded as a direct reduction of the carrying amount of the related debt and are amortized to interest expense over the term of the notes using the effective interest method.\n\nInterest expense recognized by the Company includes stated interest, amortization of debt discounts or premiums, and amortization of deferred financing costs. Such amounts are recognized over the contractual term of the related notes so as to produce a constant\n\n10\n\n \n\neffective interest rate.\n\nNotes payable are classified as current or noncurrent based on their contractual maturity dates as of the balance sheet date. The Company evaluates the terms of its notes payable to determine whether any embedded features require separate accounting, including whether such features should be bifurcated and accounted for as derivatives in accordance with ASC 815, Derivatives and Hedging.\n\nAccounting Pronouncements Not Yet Adopted\n\nIn December 2025, the FASB issued ASU 2025-12, Codification Improvements. The amendments include technical corrections, clarifications, and minor improvements to various Topics within the FASB ASC. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted. Adoption of this guidance is not expected to have a material impact on the Company’s condensed consolidated financial statements.\n\nIn December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments clarify the application of interim reporting guidance, including when Topic 270 applies, and improve the consistency and usefulness of interim disclosures. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities and for interim reporting periods within annual reporting periods beginning after December 15, 2028, for entities other than public business entities. Early adoption is permitted for all entities. The Company is currently assessing the effect of this ASU on its condensed consolidated financial statements and related disclosures.\n\nIn January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, to clarify the effective date of ASU 2024-03, Income Statement—Reporting Comprehensive Income: Disaggregation of Income Statement Expenses. FASB clarified that all public business entities should initially adopt the disclosure requirements in the ASU 2024-03 in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently assessing the effect of this ASU on its condensed consolidated financial statements and related disclosures.\n\nIn November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses, to enhance the transparency and decision usefulness of financial information presented in the income statement by requiring disaggregated information about certain income statement expense line items. The amendments apply to all public business entities. This ASU is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is currently assessing the effect of this ASU on its condensed consolidated financial statements and related disclosures.\n\n3. Fair Value of Financial Assets\n\nThe following tables present information about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:\n\n \n\n \n\n \n\nMarch 31, 2026\n\n \n\n \n\n \n\nLevel 1\n\n \n\n \n\nLevel 2\n\n \n\n \n\nLevel 3\n\n \n\n \n\nTotal\n\n \n\nCash equivalents:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nMoney market funds\n\n \n\n$\n\n4,418\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n4,418\n\n \n\n \n\n \n\n$\n\n4,418\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n4,418\n\n \n\n \n\n \n\n \n\nDecember 31, 2025\n\n \n\n \n\n \n\nLevel 1\n\n \n\n \n\nLevel 2\n\n \n\n \n\nLevel 3\n\n \n\n \n\nTotal\n\n \n\nCash equivalents:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nMoney market funds\n\n \n\n$\n\n3,130\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n3,130\n\n \n\nTreasury bills\n\n \n\n \n\n4\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n4\n\n \n\n \n\n \n\n$\n\n3,134\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n3,134\n\n \n\nDuring the three months ended March 31, 2026 and the year ended December 31, 2025, there were no transfers between levels.\n\n4. Prepaid Expenses and Other Current Assets\n\nPrepaid expenses and other current assets consisted of the following:\n\n \n\n \n\nMarch 31,\n2026\n\n \n\n \n\nDecember 31,\n2025\n\n \n\nPrepaid research and development\n\n \n\n$\n\n90\n\n \n\n \n\n$\n\n230\n\n \n\nOther current assets\n\n \n\n \n\n918\n\n \n\n \n\n \n\n881\n\n \n\nTotal prepaid expenses and other current assets\n\n \n\n$\n\n1,008\n\n \n\n \n\n$\n\n1,111\n\n \n\n \n\n11\n\n \n\n5. Goodwill and Indefinite-Lived Intangible Assets\n\nIndefinite-lived intangible assets and goodwill are tested for impairment at least annually. The assessment of recoverability and impairment was performed at the individual indefinite-lived intangible asset level. The Company did not incur impairment loss on indefinite-lived intangible assets or goodwill during the three months ended March 31, 2026. The Company incurred impairment loss on indefinite-lived intangible assets of $28,700 for the year ended December 31, 2025 in connection with funding constraints that are causing the delay in further clinical development of LTI-01 and other preclinical programs until additional funds are raised. In the fourth quarter of 2025, the Company decided to pause development activities related to LTI-01 for an indefinite period and focus on the development of LTI-03. The timing and likelihood of resuming development of LTI-01 are uncertain and contingent on the Company's ability to obtain additional financing and the future success of LTI-03. Therefore, the Company wrote off the total carrying value of the LTI-01 asset and other preclinical programs as of December 31, 2025.\n\n6. Other Assets\n\nOther assets consisted of the following:\n\n \n\n \n\nMarch 31,\n2026\n\n \n\n \n\nDecember 31,\n2025\n\n \n\nNon-current prepaid research and development\n\n \n\n$\n\n1,005\n\n \n\n \n\n$\n\n—\n\n \n\nOther assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n2\n\n \n\nTotal other non-current assets\n\n \n\n$\n\n1,005\n\n \n\n \n\n$\n\n2\n\n \n\n \n\n7. Accrued Expenses and Other Current Liabilities\n\nAccrued expenses and other current liabilities consisted of the following:\n\n \n\n \n\nMarch 31,\n2026\n\n \n\n \n\nDecember 31,\n2025\n\n \n\nExternal research and development services\n\n \n\n$\n\n762\n\n \n\n \n\n$\n\n765\n\n \n\nPayroll and payroll-related costs\n\n \n\n \n\n1,146\n\n \n\n \n\n \n\n940\n\n \n\nProfessional fees\n\n \n\n \n\n367\n\n \n\n \n\n \n\n401\n\n \n\nOther\n\n \n\n \n\n176\n\n \n\n \n\n \n\n98\n\n \n\nTotal accrued expenses and other current liabilities\n\n \n\n$\n\n2,451\n\n \n\n \n\n$\n\n2,204\n\n \n\n \n\n8. Notes Payable\n\nIn January 2026 and February 2026, the Company entered into securities purchase agreements with certain institutional investors pursuant to which the Company issued the Notes. The Notes had an aggregate principal amount of approximately $5,375 and were issued for aggregate net proceeds of $4,300, reflecting an original issue discount of approximately 20%. The Notes do not bear stated interest and mature on the earlier of (i) the closing of a qualifying financing transaction resulting in gross proceeds to the Company of at least $10,000 or (ii) June 30, 2026. The Notes are unsecured obligations of the Company.\n\nThe Company evaluated the Notes under the guidance in ASC 480 and concluded that the Notes should be classified as liabilities, as they represent unconditional obligations to deliver cash and do not meet the criteria for equity classification. The original issue discount was recorded as a debt discount and is being amortized to interest expense over the term of the Notes using the effective interest method. For the three months ended March 31, 2026, the Company recognized approximately $623 of amortization of the debt discount as interest expense. As of March 31, 2026, the carrying value of $4,923 of the Notes reflected the unamortized portion of the debt discount.\n\nIn May 2026, upon the closing of the Company’s underwritten public offering as further discussed in Note 15, the Notes matured and the Company repaid in full all outstanding amounts under the Notes.\n\n9. Preferred Stock\n\nThe Company is authorized to issue 5,000,000 shares of preferred stock, par value $0.001 per share. As of March 31, 2026 and December 31, 2025, the Company had issued 24,610 shares of Series X Preferred Stock, of which 12,232 shares of Series X Preferred Stock remained outstanding\n\nAt the 2023 annual meeting of stockholders, or the 2023Annual Meeting, the Company’s stockholders approved the issuance, in accordance with Nasdaq Listing Rule 5635(a), of shares of common stock, upon conversion of the Company’s outstanding Series X Preferred Stock. On March 5, 2024, based upon then existing beneficial ownership limitations, 11,957 shares of Series X Preferred Stock were automatically converted into 11,957,000 shares of common stock. On May 8, 2024, the Bios Entities (as defined below) provided notice to the Company and converted 421 shares of Series X Preferred Stock held by them into 421,000 shares of common stock. As of March 31, 2026 and December 31, 2025, 12,232 shares of Series X Preferred Stock (which are convertible into 12,232,000\n\n12\n\n \n\nshares of common stock) remained convertible at the option of the holder thereof, subject to certain beneficial ownership limitations (as described below).\n\nThe Company evaluated the Series X Preferred Stock for liability classification in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity, or ASC 480, and determined that equity treatment was appropriate because the Series X Preferred Stock did not meet the definition of the liability instruments. Specifically, the Series X Preferred Stock is not mandatorily redeemable and does not embody an obligation to buy back the shares outside of the Company’s control in a manner that could require the transfer of assets. The Company determined that the Series X Preferred Stock would be recorded as temporary equity, based on the guidance of ASC 480, given that it is contingently redeemable.\n\nEach share of Series X Preferred Stock is convertible into 1,000 shares of Common Stock. The preferences, rights, and limitations initially applicable to the Series X Preferred Stock are set forth in the Certificate of Designation of Series X Non-Voting Convertible Preferred Stock, or the Certificate of Designation.\n\nThe Series X Preferred Stock has the following characteristics:\n\nVoting\n\nExcept as otherwise required by law, the Series X Preferred Stock does not have voting rights. However, as long as any shares of Series X Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series X Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the Series X Preferred Stock or alter or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, the Certificate of Incorporation or by-laws of the Company, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series X Preferred Stock, (ii) issue further shares of Series X Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series X Preferred Stock, or (iii) enter into any agreement with respect to any of the foregoing.\n\nDividends\n\nHolders of Series X Preferred Stock are entitled to receive dividends on shares of Series X Preferred Stock equal, on an as-if-converted-to-common-stock basis, and in the same form as dividends actually paid on shares of the common stock. Such dividends are not cumulative. Since the Company’s inception, no dividends have been declared or paid.\n\nLiquidation, dissolution or winding up\n\nThe Series X Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company.\n\nUpon liquidation, dissolution or winding up of the Company, the Series X preferred stockholders shall be entitled to receive an equivalent amount of distributions as would be paid on the common stock underlying the Series X Preferred Stock, determined on an as-converted basis, pari passu with any distributions to the common stock shareholders.\n\nConversion\n\nThe Series X Preferred Stock is convertible into common stock at a rate of 1,000 shares of common stock for every one share of Series X Preferred Stock that is converted. The Series X Preferred Stock is subject to certain beneficial ownership limitations, including that a holder of Series X Preferred Stock is prohibited from converting shares of Series X Preferred Stock into shares of common stock if, as a result of such conversion, such holder (together with its affiliates and any other persons acting as a group together with the holder or any of its affiliates) would beneficially own more than a specified percentage (to be initially set at 19.99% and thereafter adjusted by the holder to a number not to exceed 19.99%) of the total number of shares of common stock issued and outstanding immediately after giving effect to such conversion.\n\nRedemption\n\nShares of the Series X Preferred Stock are not redeemable at the election of the holder.\n\nMaturity\n\nThe Series X Preferred Stock shall be perpetual unless converted.\n\n10. Common Stock\n\nAs of March 31, 2026 and December 31, 2025, the Company was authorized to issue 100,000,000 shares of common stock, par value $0.001 per share.\n\nAs of March 31, 2026 and December 31, 2025, the Company had 28,039,032 and 27,550,222 shares of common stock issued and outstanding, respectively.\n\n13\n\n \n\nEach share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the Company’s Board, if any. As of March 31, 2026 and December 31, 2025, no dividends had been declared.\n\nIn the event of liquidation or dissolution, the holders of the common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock.\n\nIssuance of Common Stock and Warrants\n\nWainwright Sales Agreement\n\nOn May 15, 2025, the Company entered into the Wainwright Sales Agreement with H.C. Wainwright, as agent and/or principal, pursuant to which the Company could offer and sell shares of its common stock having an aggregate offering price of up to $13,702 from time to time through or to H.C. Wainwright by any method permitted that is deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. As of March 31, 2026, the Company had issued and sold 1,296,777 shares of common stock pursuant to the Wainwright Sales Agreement for total net proceeds of $1,844, after deducting transaction fees of $67 paid by the Company. In July 2025, in connection with the Yorkville Transactions, the Company reduced the aggregate offering price of the shares of common stock that could be offered and sold under the Wainwright Sales Agreement to $8,067.\n\nWarrant Exercises and Exchanges\n\nOn April 21, 2025, the Company entered into privately negotiated letter agreements with certain holders of its outstanding warrants issued on November 2, 2023, or the PIPE Warrants, and May 1, 2024, or the Offering Warrants. Pursuant to these agreements, certain holders agreed to exercise the PIPE Warrants for an aggregate of 159,500 shares of the Company’s common stock and the Offering Warrants for an aggregate of 884,798 shares of common stock, at a reduced exercise price of $1.60 per share. The original exercise prices were $4.89 per share for the PIPE Warrants and $4.68 per share for the Offering Warrants. The exercise of the PIPE Warrants was completed on April 24, 2025, and the exercise of the Offering Warrants was completed in May 2025 (collectively, the “Warrant Exercises”). The Company received total net proceeds of $1,595 from the Warrant Exercises.\n\nSeparately, in April 2025, the Company entered into agreements with additional holders of the PIPE Warrants who agreed to surrender warrants representing an aggregate of 1,939,000 shares of common stock for cancellation. In exchange, these holders received pre-funded warrants (the “Exchange Pre-Funded Warrants”) exercisable for the same number of shares at an exercise price of $0.001 per share and paid $1.599 per share in cash by April 24, 2025 (the “Warrant Exchanges”). The Company received total net proceeds of $2,984 from the Warrant Exchanges.\n\nAs part of the Warrant Exchanges, entities affiliated with Bios Equity Partners, LP (“Bios Partners”) surrendered PIPE Warrants representing an aggregate of 1,300,500 shares and provided the associated cash consideration of $2,079 for the issuance of Exchange Pre-Funded Warrants.\n\nIn addition, on April 21, 2025, an entity affiliated with Bios Partners agreed to purchase additional pre-funded warrants to acquire 312,695 shares of the Company’s common stock in a private placement at a price of $1.599 per share, resulting in total net proceeds of $481 (the “Bios Pre-Funded Warrants”). The Exchange Pre-Funded Warrants and the Bios Pre-Funded Warrants are collectively referred to as the “Pre-Funded Warrants.”\n\nThe Company assessed the Pre-Funded Warrants for appropriate classification under U.S. GAAP and determined that they are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to ASC 815, Derivatives and Hedging. The Pre-Funded Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the Pre-Funded Warrants are classified as equity and accounted for as a component of additional paid-in capital at the time of issuance. The Pre-Funded Warrants were initially recognized at their fair value, calculated as the fair value of the underlying common stock less the exercise price of $0.001 per share. The fair value of the common stock was determined based on the quoted market price of the Company’s common stock as of the issuance date. The Pre-Funded Warrants will not be remeasured subsequent to initial recognition.\n\nThe repricing of the PIPE Warrants and the Offering Warrants and issuance of the Exchange Pre-Funded Warrants is considered a modification under the guidance of ASU 2021-04. The modification is consistent with the “Equity Issuance” classification under that guidance as the reason for the modification was to induce the holder to cash exercise their warrants, resulting in the imminent exercise of the PIPE Warrants and the Offering Warrants, which raised equity capital and generated net proceeds for the Company of approximately $4,601. The total fair value of the consideration of the modification includes the incremental fair value of the PIPE Warrants and the Offering Warrants (determined by comparing the fair values immediately prior to and immediately after the modification) and the initial fair value of the PIPE Warrants and the Offering Warrants. The fair values of the PIPE Warrants and the Offering Warrants were calculated using the Black-Scholes model. The Company determined that the total fair value of the consideration related to the modification of PIPE Warrants and the Offering Warrants, including the initial fair value of the Exchange Pre-Funded\n\n14\n\n \n\nWarrants was $4,757. The net effect of the modification in the amount of $490, as well as the value of the replaced PIPE warrants of $1,385 and the fair value of the Exchange Pre-Funded Warrants of $5,652 were recorded in additional paid-in capital, as both the original warrants (the PIPE Warrants and the Offering Warrants) and the replacement instruments (the Exchange Pre-Funded Warrants) are equity-classified.\n\nThe Offering Warrants\n\nIn May 2024, the Company completed the Offering pursuant to which the Company issued and sold 4,273,505 shares of the Company’s common stock and accompanying Offering Warrants to purchase 4,273,505 shares of common stock. Net proceeds from the Offering were approximately $17,675, after deducting underwriting discounts and commissions and offering expenses, and excluding any proceeds that may be received from exercise of the Offering Warrants. The Offering closed on May 3, 2024.\n\nThe Company had assessed the Offering Warrants for appropriate equity or liability classification and determined the Offering Warrants are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to ASC 815. The Offering Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the Offering Warrants are classified as equity and accounted for as a component of additional paid-in capital at the time of issuance. The Offering Warrants were initially recognized at their relative fair value in the amount of $8.0 million at the time of issuance determined using Black-Scholes option-pricing model and will not be remeasured.\n\nThe Offering Warrants to purchase 884,798 shares of common stock were exercised in April 2025 as part of April 2025 Transactions. As of March 31, 2026 and December 31, 2025, Offering Warrants to purchase 3,388,707 shares of common stock remained outstanding.\n\nPrepaid Purchase Agreement\n\nOn July 29, 2025, the Company entered into a PPA with Yorkville, pursuant to which the Company may request pre-paid advances of up to $6,000 from Yorkville over a 12-month period, subject to certain limitations and conditions set forth in the PPA. Each Pre-Paid Advance is subject to the consent of Yorkville. Interest shall accrue on the outstanding balance of any Pre-Paid Advance at an annual rate of 8%, subject to an increase to 18% upon events of default described in the PPA. All Pre-Paid Advances are due and payable on the 12-month anniversary of their issuance. At any time that there is an outstanding balance under any Pre-Paid Advances, Yorkville may provide written notice, or Purchase Notice, requiring the Company to issue and sell shares of its common stock to Yorkville, which shall be offset against and reduce the amounts outstanding under the Pre-Paid Advance. The initial advance under the PPA of $1,000 was purchased on July 29, 2025, with net proceeds of $950 after a 5% original issue discount, or OID. On September 8, 2025, the Company entered into a second PPA with Yorkville for an additional $1,000 advance, with net proceeds of $950 after the 5% OID. On October 23, 2025, the Company entered into a third PPA with Yorkville for an additional $1,000 advance, with net proceeds of $950 after the 5% OID.\n\nThe Company elected the fair value option under ASC 825, Financial Instruments, or ASC 825, to measure the PPAs at fair value, with changes in fair value recognized in earnings. The initial fair value was determined to be equal to the net proceeds received ($950 per PPA), as this amount represented the cash consideration exchanged, consistent with ASC 825. OID costs of $100 related to the first and second PPA were expensed as incurred in the third quarter of 2025, as required under the fair value option. Additionally, the Company incurred legal costs of $118 which were expensed in the consolidated statements of operations and other comprehensive loss.\n\nUnder the terms of the PPAs, the Company issued shares of common stock to Yorkville in satisfaction of the advances. The number of shares issued was determined based on the applicable purchase price per share equal to the lower of (a) 115% of the daily volume weighted average price, or the VWAP, of the Company’s common stock on the last full trading day immediately prior to the date of such Pre‑Paid Advance and (b) 95% of the lowest daily VWAP of the Company’s common stock during the seven consecutive trading days immediately preceding the date on which Yorkville provides the Purchase Notice to the Company, but in no event less than the floor price set forth in the PPA. The carrying value of the PPA and accrued interest were reduced by the issuance of the shares.\n\nUnder the terms of the PPAs, through September 24, 2025, the Company issued an aggregate of 1,880,872 shares of common stock to Yorkville (953,765 shares under the first PPA through September 9, 2025, and 927,107 shares under the second PPA), based on the principal of $2,000 from the PPA and $11 of interest expense. The shares were recorded at par value of $0.001 per share with the remainder credited to additional paid-in capital, or APIC.\n\nOn October 23, 2025, Yorkville purchased a third PPA of $1,000, for which the Company received net proceeds of $950. The third PPA was converted to 846,290 shares of the Company’s common stock in October 2025, with no remaining outstanding balance. The shares were recorded at par value of $0.001 per share with the remainder credited to APIC.\n\nThe initial, the second and the third PPAs were fully settled in 2025, with no remaining outstanding balance. Accordingly, the fair value of the liabilities at March 31, 2026, was $0, and no adjustment for changes in fair value was required.\n\n15\n\n \n\nOn December 11, 2025, the Company terminated the PPA.\n\nAs of March 31, 2026, there were:\n\n•\n12,469,000 shares of common stock reserved for issuance upon conversion of the Series X Preferred Stock;\n\n•\n3,143,997 shares of common stock issuable upon the exercise of options under existing equity incentive plans;\n\n•\n228,000 shares of common stock issuable for vested but unsettled restricted stock units (Note 10);\n\n•\n2,106,194 and 7,500 shares of common stock reserved for issuance under the 2021 Plan (Note 10) and 2017 ESPP (Note 10), respectively, as well as any automatic increases in the number of shares of the common stock reserved under these plans; and\n\n•\n6,621,839 shares of common stock reserved for issuance upon exercise of outstanding warrants. The warrants consist of (i) warrants to purchase 726,437 shares of the Company’s common stock, with an exercise price of $5.66, which expire on May 20, 2029, which were assumed in connection with the Lung Acquisition, (ii) warrants to purchase 255,000 shares of the Company’s common stock, with an exercise price of $4.89 per share, which were issued and sold in the PIPE Financing as described above and expire on May 2, 2027, (iii) warrants to purchase 3,388,707 shares of the Company’s common stock, with an exercise price of $4.68 per share, which were issued and sold in the Offering as described above and expire on May 3, 2027, (iv) the Exchange Pre-Funded Warrants to purchase 1,939,000 shares of the Company's common stock, with an exercise price of $0.001 per share, which were issued and sold in the Warrant Exchanges as described above can be exercised at any time after their original issuance until such Exchange Pre-Funded Warrants are exercised in full, and (v) the Bios Pre-Funded Warrants to purchase 312,695 shares of the Company's common stock, with an exercise price of $0.001 per share, which were issued and sold in April 2025 as described above and can be exercised at any time after their original issuance until such Bios Pre-Funded Warrants are exercised in full.\n\nAccordingly, as of March 31, 2026, out of the 100,000,000 shares of common stock presently authorized, 52,615,562 shares are issued and outstanding or reserved for issuance and 47,384,438 shares of common stock remain available for future issuance.\n\n11. Stock-Based Awards\n\nAs of March 31, 2026, the Company had five equity compensation plans, each of which was approved by its stockholders: 2006 Equity Incentive Plan, as amended, or the 2006 Plan, 2016 Stock Incentive Plan, or the 2016 Plan, 2017 Stock Incentive Plan, or the 2017 Plan, 2021 Stock Incentive Plan, or the 2021 Plan, and 2017 Employee Stock Purchase Plan, or the 2017 ESPP. The Company also assumed Lung’s 2013 Long-Term Incentive Plan, or the 2013 Plan, as a result of the Lung Acquisition.\n\nAs of March 31, 2026, the Company had no shares issuable upon exercise of outstanding options under the 2006 Plan; 8,404 shares to be issued upon exercise of outstanding options under the 2016 Plan, 98,528 shares to be issued upon exercise of outstanding options under the 2017 Plan and 1,520,179 shares to be issued upon exercise of outstanding options under the 2021 Plan. No shares remained available for future awards under the 2006 Plan, the 2016 Plan, and the 2017 Plan as of March 31, 2026. Shares that are expired, terminated, surrendered or canceled without having been fully exercised under the 2017 Plan will be available for future awards under the 2021 Plan. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards under the 2021 Plan.\n\nUnder the 2021 Plan, shares that are expired, terminated, surrendered or canceled without having been fully exercised will be available for future awards. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards.\n\nThe exercise price for stock options granted may not be less than the fair market value of the common stock as of the date of grant.\n\n2021 Stock Incentive Plan\n\nThe Company’s 2021 Plan was approved by the Company’s stockholders on June 15, 2021 and became effective on June 16, 2021. At the 2023 Annual Meeting, the stockholders of the Company approved an amendment, or the Plan Amendment, to the 2021 Plan to increase the number of shares of common stock issuable under the 2021 Plan by 3,000,000 shares to 3,840,254. Other than increasing the number of shares issuable under the 2021 Plan, the Plan Amendment does not make any changes to the 2021 Plan.\n\nUnder the 2021 Plan, the Company may grant incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, awards of restricted stock units and other stock-based awards. The Company’s employees, officers, directors, consultants and advisors are eligible to receive awards under the 2021 Plan; however, incentive stock options may only be granted to employees. The 2021 Plan is administered by the Board or, at the discretion of the Board, by a committee of the Board. The number of shares of common stock covered by options and the date those options become exercisable, type of options to be granted, exercise prices, vesting and other restrictions are determined at the discretion of the Board, or its committee if so delegated.\n\n16\n\n \n\nStock options granted under the 2021 Plan with service-based vesting conditions generally vest over four years and may not have a duration in excess of ten years, although options have been granted with vesting terms of less than four years.\n\nThe total number of shares of common stock that may be issued under the 2021 Plan was 3,840,254 as of March 31, 2026, of which 2,106,194 shares remained available for grant. The Company initially reserved 625,000 shares of common stock, plus the number of shares of common stock subject to outstanding awards under the 2017 Plan, the 2016 Plan and the 2006 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right up to 314,006 shares. As of March 31, 2026, the Company had 1,520,179 shares to be issued upon exercise of outstanding options under the 2021 Plan.\n\n2013 Stock Incentive Plan\n\nThe Company assumed the 2013 Plan as a result of the Lung Acquisition. In October 2013, Lung’s Board of Directors, or the Lung Board, approved the 2013 Plan to provide long-term incentives for its employees, non-employee directors and certain consultants. As of March 31, 2026, 1,516,886 shares were reserved to be issued upon exercise of options outstanding under the 2013 Plan. These options were assumed by the Company in connection with the Lung Acquisition.\n\nBefore the Lung Acquisition, the 2013 Plan was administered by the Lung Board or, at the discretion of the Lung Board, by a committee of the Lung Board. The exercise prices, vesting and other restrictions were determined at the discretion of the Lung Board, or its committee if so delegated, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the share of common stock on the date of grant and the term of stock option may not be greater than ten years. The contractual term for stock option awards is ten years. The vesting periods for equity awards were determined by the Lung Board, but generally were four years. The contractual term for stock option awards is ten years. Following the closing of the Lung Acquisition on October 31, 2023, no further awards can be granted under the 2013 Plan.\n\nStock Option Valuation\n\nThere were no stock awards granted in the three months ended March 31, 2026 and 2025.\n\nStock Options\n\nThe following table summarizes the Company’s stock option activity since January 1, 2026:\n\n \n\n \n\n \n\nNumber of\nShares\n\n \n\n \n\nWeighted\nAverage\nExercise\nPrice Per Share\n\n \n\n \n\nWeighted\nAverage\nRemaining\nContractual\nTerm\n\n \n\n \n\nAggregate\nIntrinsic\nValue\n\n \n\nOutstanding at January 1, 2026\n\n \n\n \n\n3,143,997\n\n \n\n \n\n$\n\n5.21\n\n \n\n \n\n \n\n6.1\n\n \n\n \n\n$\n\n158\n\n \n\nExercised\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nForfeited/Canceled\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nExpired\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nOutstanding at March 31, 2026\n\n \n\n \n\n3,143,997\n\n \n\n \n\n$\n\n5.21\n\n \n\n \n\n \n\n5.9\n\n \n\n \n\n$\n\n319\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOptions exercisable at March 31, 2026\n\n \n\n \n\n2,471,114\n\n \n\n \n\n$\n\n5.93\n\n \n\n \n\n \n\n5.2\n\n \n\n \n\n$\n\n292\n\n \n\nOptions vested and expected to vest at March 31, 2026\n\n \n\n \n\n3,124,534\n\n \n\n \n\n$\n\n5.22\n\n \n\n \n\n \n\n5.9\n\n \n\n \n\n$\n\n318\n\n \n\nOptions exercisable at December 31, 2025\n\n \n\n \n\n2,418,033\n\n \n\n \n\n$\n\n6.00\n\n \n\n \n\n \n\n5.4\n\n \n\n \n\n$\n\n138\n\n \n\nOptions vested and expected to vest at December 31, 2025\n\n \n\n \n\n3,120,459\n\n \n\n \n\n$\n\n5.23\n\n \n\n \n\n \n\n6.1\n\n \n\n \n\n$\n\n157\n\n \n\nThe aggregate fair value of stock options that vested during the three months ended March 31, 2026 and 2025, was $131 and $46, respectively.\n\nThe aggregate intrinsic value of stock 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 Company’s common stock. There were no stock options exercised during the three months ended March 31, 2026. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2025 was $18.\n\nRestricted Stock Units\n\nThe Company has granted restricted stock units with service-based vesting conditions. Unvested shares of restricted common stock may not be sold or transferred by the holder.\n\nThere were no restricted stock units granted in the three months ended March 31, 2026. In August 2025, the Company granted 1,000,000 restricted stock units that were immediately vested. As of March 31, 2026, there were 228,000 vested restricted stock units that were not issued.\n\n17\n\n \n\nStock-Based Compensation\n\nThe Company recorded stock-based compensation expense related to stock options in the following expense categories of its statements of operations and comprehensive loss:\n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nResearch and development expenses\n\n \n\n$\n\n32\n\n \n\n \n\n$\n\n64\n\n \n\nGeneral and administrative expenses\n\n \n\n \n\n124\n\n \n\n \n\n \n\n200\n\n \n\nTotal stock-based compensation expense\n\n \n\n$\n\n156\n\n \n\n \n\n$\n\n264\n\n \n\nAs of March 31, 2026, the Company had an aggregate of $1,319 of unrecognized stock-based compensation expense, which it expects to recognize over a weighted average period of 2.58 years. As of March 31, 2025, the Company had an aggregate of $2,130 of unrecognized stock-based compensation expense, which it expects to recognize over a weighted average period of 3.15 years.\n\n12. Net Loss per Share\n\nBasic and diluted net loss per share attributable to common stockholders was calculated as follows:\n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nNumerator:\n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n\n$\n\n(5,838\n\n)\n\n \n\n$\n\n(5,501\n\n)\n\nDenominator:\n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted average common shares outstanding—basic and diluted\n\n \n\n \n\n30,354,647\n\n \n\n \n\n \n\n21,915,891\n\n \n\nNet loss per share attributable to common stockholders—basic and diluted\n\n \n\n$\n\n(0.19\n\n)\n\n \n\n$\n\n(0.25\n\n)\n\nAs part of the April 2025 Transactions, the Pre-Funded Warrants to purchase an aggregate of 2,251,695 shares of common stock at an exercise price of $0.001 per share are included within the denominator for basic net loss per share purposes and considered outstanding as of the date of issuance.\n\nThe 228,000 restricted stock units vested but not issued as of March 31, 2026, are included in earnings per share calculation as all conditions for issuance have been satisfied making the underlying shares contingently issuable and economically equivalent to outstanding shares.\n\nThe Company’s potential dilutive securities, which include stock options as of March 31, 2026 and 2025, have been excluded from the computation of diluted net loss per share attributable to common stockholders whenever the effect of including them would be to reduce the net loss per share. In periods where there is a net loss, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The following potential shares of common stock, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:\n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nOptions to purchase common stock\n\n \n\n \n\n3,143,997\n\n \n\n \n\n \n\n3,080,582\n\n \n\nWarrants to issue shares of common stock\n\n \n\n \n\n6,621,839\n\n \n\n \n\n \n\n7,353,442\n\n \n\nSeries X Preferred Stock issued and outstanding, as converted\n\n \n\n \n\n12,232,000\n\n \n\n \n\n \n\n12,232,000\n\n \n\nTotal\n\n \n\n \n\n21,997,836\n\n \n\n \n\n \n\n22,666,024\n\n \n\n \n\n13. Commitments and Contingencies\n\nLegal Proceedings\n\nThe Company may from time to time be party to litigation arising in the ordinary course of business. As of March 31, 2026, the Company was not party to any legal proceedings and no material legal proceedings are currently pending or, to the best of the Company’s knowledge, threatened.\n\nIntellectual Property Licenses\n\nHarvard and Dana-Farber Agreement\n\nIn August 2006, the Company entered into an exclusive license agreement with President and Fellows of Harvard College, or Harvard, and Dana-Farber Cancer Institute, or DFCI. The agreement granted the Company an exclusive worldwide license, with the right to sublicense, under specified patents and patent applications to develop, obtain regulatory approval for and commercialize specified product candidates based on cell-permeating peptides. Under the agreement, the Company is obligated to use commercially\n\n18\n\n \n\nreasonable efforts to develop and commercialize one or more licensed products and to achieve specified milestone events by specified dates. In connection with entering into the agreement, the Company paid an upfront license fee and issued to Harvard and DFCI shares of its common stock.\n\nIn February 2010, the agreement was amended and restated, or the Harvard/DFCI agreement, under which additional patent rights were added to the scope of the license agreement and the annual license maintenance fees were increased. Under the Harvard/DFCI agreement, the Company is obligated to make aggregate milestones payments of up to $7,700 per licensed therapeutic product upon the Company’s achievement of specified clinical, regulatory and sales milestones with respect to such product and up to $700 per licensed diagnostic product upon the Company’s achievement of specified regulatory and sales milestones with respect to such product. In addition, the Company is obligated to pay royalties of low single-digit percentages on annual net sales of licensed products sold by the Company, its affiliates or its sublicensees. The royalties are payable on a product-by-product and country-by-country basis and may be reduced in specified circumstances. In addition, the agreement obligates the Company to pay a percentage, up to the mid-twenties, of fees received by the Company in connection with its sublicense of the licensed products. In accordance with the terms of the agreement, the Company’s sublicense payment obligations may be subject to specified reductions.\n\nThe Harvard/DFCI agreement requires the Company to pay annual license maintenance fees of $110 each year, which was reduced to $35 starting in 2023. Any payments made in connection with the annual license maintenance fees will be credited against any royalties due.\n\nAs of March 31, 2026, the Company had not developed a commercial product using the licensed technologies and no royalties under the agreement had been paid or were due.\n\nUnder the Harvard/DFCI agreement, the Company is responsible for all patent expenses related to the prosecution and maintenance of the licensed patents and applications in-licensed under the agreement as well as cost reimbursement of amounts incurred for all documented patent-related expenses. The agreement will expire on a product-by-product and country-by-country basis upon the last to expire of any valid patent claim pertaining to licensed products covered under the agreement. The Company incurred $9 license maintenance fees in the three months ended March 31, 2026 and 2025, respectively.\n\nAgreement with the University of Texas Health Science Center at Tyler\n\nIn June 2013, the Company entered into a patent and technology license agreement with UT System, on behalf of UTHSCT. The patent and technology license agreement with UT System, or the UTHSCT Agreement, provides the Company access to patents and technology related to the development of LTI-01 and LTI-03. As part of the UTHSCT Agreement, the Company has (i) a royalty-bearing, exclusive license under the patent rights to manufacture, distribute, and sell certain intellectual property; (ii) a non-exclusive license under the technology rights to manufacture, distribute and sell the licensed product; and (iii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the UTHSCT Agreement. In December 2013, the UTHSCT Agreement was amended and restated to include certain patents in all fields worldwide. In May 2017, the UTHSCT Agreement was amended and restated to modify the specific milestone criteria.\n\nIn consideration of the UTHSCT Agreement, the Company agreed to pay past and ongoing patent expenses, and the Company owes UTHSCT sublicensing fees, assignment fees, and single digit royalties on worldwide net product sales, with fixed minimum royalty payments that started in 2015.\n\nPursuant to the UTHSCT Agreement, the Company is required to use diligent efforts to commercialize the licensed technology as soon as commercially practicable, including maintaining active research and development, regulatory, marketing and sales program, all as commercially reasonable.\n\nThe Company may terminate the UTHSCT Agreement for convenience with 90 days’ notice. UTHSCT may also terminate the UTHSCT Agreement, but only if the Company breaches the terms of the agreement. The Company did not incur any expense under the UTHSCT Agreement in the three months ended March 31, 2026 and 2025.\n\nAgreement with the University of Texas at Austin\n\nIn May 2015, the Company entered into a patent license agreement with UT Austin on behalf of UT System. This license agreement with UT Austin, or the UT Austin 6607 Agreement, relates to the patent rights to polypeptide therapeutics and uses thereof. Pursuant to the UT Austin 6607 Agreement the Company has (i) a royalty-bearing, exclusive license under the patent rights to manufacture, distribute, and sell the licensed product; and (ii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement. The UT Austin 6607 Agreement was amended and restated in January 2017, November 2018, and June 2019. The amendments related to extension of milestone payment dates and specific terminology around the milestone achievement criteria.\n\nIn consideration of the UT Austin 6607 Agreement, the Company agreed to pay past and ongoing patent expenses, milestone fees upon certain development and regulatory milestone events, annual license fees, tiered sublicense fees, assignment fees, low single digit royalties on net sales and a Food and Drug Administration, or FDA, Priority Review Voucher fee if the Company sells or transfers this voucher.\n\n19\n\n \n\nPursuant to the UT Austin 6607 Agreement, the Company is required to use diligent efforts to commercialize the licensed products, including maintaining active research and development, regulatory, marketing and sales program. Moreover, the Company is required to meet certain development and regulatory milestones by specific dates.\n\nThe Company may terminate the UT Austin 6607 Agreement for convenience with 90 days’ notice. UT Austin may also terminate the UT Austin 6607 Agreement, but only if the Company breaches the terms of the agreement. The Company did not incur any expense under the UT Austin 6607 Agreement in the three months ended March 31, 2026 and 2025.\n\nAgreement with Medical University of South Carolina\n\nIn March 2016, the Company entered into a license agreement with Medical University of South Carolina Foundation for Research Development, or MUSC. Pursuant to this license agreement with MUSC, or the MUSC Agreement, the Company has patent rights related to protecting against lung fibrosis by up regulating Cav1. The MUSC Agreement granted (i) a royalty-bearing, exclusive license under the patent rights to make, use and sell the license product; and (ii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement. In September 2018, the agreement was amended and restated to include definitions of related methods, related products and related rights.\n\nIn consideration of the MUSC Agreement, the Company agreed to pay a non-refundable license fee, patent expenses, milestone fees upon certain development, regulatory and commercial milestone events, sublicense fees, assignment fees and low single digit royalties on net sales, with a fixed minimum royalty payment starting in 2019 and a transaction fee upon the Company’s liquidation.\n\nPursuant to the MUSC Agreement, the Company is required to use diligent efforts to develop, manufacture and sell the licensed products.\n\nThe Company may terminate the MUSC Agreement for convenience by providing a written notice to MUSC effective 90 days following the receipt of notice, and either party may terminate the agreement for a breach of contract. The Company did not incur any license fees under the MUSC Agreement in the three months ended March 31, 2026 and 2025.\n\nAgreement with Vivarta Therapeutics LLC\n\nIn March 2018, the Company entered into a license agreement with Vivarta Therapeutics, LLC, or Vivarta. This license agreement with Vivarta, or the Vivarta Agreement, relates to intellectual property relating to epithelial sodium channel inhibitors and methods to treat pulmonary disease. Pursuant to the Vivarta Agreement the Company has (i) a royalty-bearing, exclusive license under the intellectual property rights to make, use and sell the licensed product, and (ii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement.\n\nIn consideration for the Vivarta Agreement, the Company agreed to grant Vivarta a warrant to purchase an aggregate of 75,000 shares of common stock of Lung for $0.12 per share, to pay a license fee of $10,000 upon the Vivarta Agreement effective date and $40,000 within 30 days of the receipt of a positive freedom to operate analysis from legal counsel. The Company also agreed to pay patent expenses, milestone fees upon certain development and regulatory milestone events, sublicense fees, assignment fees and low single digit royalties on net sales.\n\nPursuant to the Vivarta Agreement, the Company is required to use diligent efforts to develop, manufacture and sell the licensed products.\n\nThe Company may terminate the Vivarta Agreement for convenience by providing a written notice to Vivarta effective 90 days following the receipt of notice, and either party may terminate the agreement for a breach of contract. The Company did not incur any expenses under the Vivarta Agreement in the three months ended March 31, 2026 and 2025.\n\nLetter Agreement with Rients\n\nIn August 2025, the Company entered into a letter agreement with Rients for Rients to evaluate the legacy ALRN-6924 compound, or the Compound Asset. During the term of the letter agreement, Rients shall pay the Company for all fees and expenses incurred by the Company to maintain the Compound Asset.\n\nProject Addendum\n\nIn December 2025, the Company entered into a project addendum with a third party Contract Research Organization, or CRO, for the purposes of setting forth the responsibilities and obligations of the parties in regards to conducting a certain clinical research program entitled “A Phase 2, Randomized, Double-Blind, Placebo-Controlled Study of the Safety, Tolerability and Efficacy of Caveolin-1-Scaffolding-Protein-Derived Peptide in Patients with IPF” under the Company’s Protocol LTI-03-2001. Pursuant to the project addendum, the Company have contracted to receive up to $19.8 million of master services as the Company may request from time to time at its discretion.\n\n20\n\n \n\nIndemnification Agreements\n\nIn the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, 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 and officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. As of the date of this report, the Company has not incurred any material costs or claims as a result of such indemnifications.\n\n14. Segment Reporting\n\nThe Company has one reportable segment which focuses on developing novel therapies for the treatment of orphan pulmonary and fibrosis indications with no approved or limited effective treatments. The Company’s CODM, the CEO, manages the Company’s operations on a consolidated basis as one operating segment for the purposes of evaluating financial performance and allocating resources.\n\nThe Company has not generated any revenue yet. The CODM assesses the financial performance of the segment and decides how to allocate resources based on net loss on a consolidated basis. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.\n\nThe CODM uses net loss predominantly in the annual operating budget and in the strategic planning and forecasting process. Such loss measure is used to monitor budget versus actual results on an ongoing basis by the CODM and determine how resources are allocated to the various activities of the Company. The CODM also uses net loss to evaluate the Company’s performance and assist in determination of management’s incentive compensation.\n\nAll of the Company’s tangible assets are held in the United States. The Company views its operations and manages its business in one operating segment operating exclusively in the United States.\n\nThe table below is a summary of the segment loss, including significant segment expenses:\n\n \n\n \n\nThree Months Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nRevenues\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\nResearch and development expenses:\n\n \n\n \n\n \n\n \n\n \n\n \n\nLTI-01 program-related expenses:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCMC activities\n\n \n\n \n\n67\n\n \n\n \n\n \n\n537\n\n \n\nClinical operation activities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n65\n\n \n\nTotal LTI-01 program-related expenses\n\n \n\n \n\n67\n\n \n\n \n\n \n\n602\n\n \n\nLTI-03 program-related expenses:\n\n \n\n \n\n \n\n \n\n \n\n \n\nPreclinical study costs\n\n \n\n \n\n—\n\n \n\n \n\n \n\n556\n\n \n\nCMC activities\n\n \n\n \n\n520\n\n \n\n \n\n \n\n560\n\n \n\nClinical operation activities\n\n \n\n \n\n1,961\n\n \n\n \n\n \n\n673\n\n \n\nTotal LTI-03 program-related expenses\n\n \n\n \n\n2,481\n\n \n\n \n\n \n\n1,789\n\n \n\nOther program-related expenses\n\n \n\n \n\n—\n\n \n\n \n\n \n\n8\n\n \n\nEmployee related expenses\n\n \n\n \n\n500\n\n \n\n \n\n \n\n622\n\n \n\nProfessional fees for services\n\n \n\n \n\n—\n\n \n\n \n\n \n\n17\n\n \n\nFacilities and other expenses\n\n \n\n \n\n25\n\n \n\n \n\n \n\n16\n\n \n\nTotal research and development expenses\n\n \n\n \n\n3,073\n\n \n\n \n\n \n\n3,054\n\n \n\nGeneral and administrative expenses:\n\n \n\n \n\n \n\n \n\n \n\n \n\nEmployee related expenses\n\n \n\n \n\n859\n\n \n\n \n\n \n\n947\n\n \n\nProfessional fees for services\n\n \n\n \n\n790\n\n \n\n \n\n \n\n1,138\n\n \n\nFacilities and other expenses\n\n \n\n \n\n508\n\n \n\n \n\n \n\n470\n\n \n\nTotal general and administrative expenses\n\n \n\n \n\n2,157\n\n \n\n \n\n \n\n2,555\n\n \n\nOther (expense) income, net\n\n \n\n \n\n(608\n\n)\n\n \n\n \n\n108\n\n \n\nSegment and consolidated net loss\n\n \n\n$\n\n(5,838\n\n)\n\n \n\n$\n\n(5,501\n\n)\n\n \n\n15. Subsequent Event\n\nOn May 4, 2026, the Company completed an underwritten public offering of 50,000,000 shares of its common stock at a public offering price of $1.00 per share. In connection with the offering, the Company granted the underwriters a 45-day option to purchase up\n\n21\n\n \n\nto an additional 7,500,000 shares of its common stock at the public offering price, less underwriting discounts and commissions, which was fully exercised on May 5, 2026. The Company refers to these transactions collectively as the May 2026 Offering. Aggregate gross proceeds from the May 2026 Offering were $57,500, and net proceeds to the Company were approximately $53,106 after deducting underwriting discounts, commissions, and offering expenses of approximately $4,394.\n\nFollowing the closing of the offering, the Company had 85,539,032 shares of common stock outstanding.\n\nThe Company issued to the underwriters warrants to purchase 1,725,000 of the Company’s shares of common stock in connection with the May 2026 Offering. The warrants are exercisable at $1.50 per share for a five year period ending April 30, 2031 in compliance with FINRA Rule 5110(g)(8)(A). The warrants have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to FINRA Rule 5110(e).\n\nThe Company intends to use the net proceeds from the May 2026 Offering for working capital and general corporate purposes. In connection with the May 2026 offering, the Company repaid unsecured promissory notes with an aggregate original principal amount of $5,375 that were issued in January 2026 and February 2026.\n\nPursuant to the underwriting agreement, the Company is subject to a lock-up period of up to 120 days following the closing of the May 2026 Offering, during which it has agreed, subject to certain exceptions, not to sell, transfer, or dispose of, directly or indirectly, any shares of its capital stock or securities convertible into or exercisable or exchangeable for such shares.\n\nOn April 30, 2026, the Company entered into a letter agreement with Bios Partners, L.P., on behalf of certain Bios entities holding securities of the Company, pursuant to which the Bios entities agreed to defer the conversion of 12,232 shares of Series X Preferred Stock of the Company held by the Bios entities, and waive the Company’s obligation in the Company’s Certificate of Designation of Series X Preferred Stock to reserve the shares of common stock (“Underlying Shares”) issuable upon exercise of Series X Preferred Stock shares until such time as the Company has amended its Restated Certificate of Incorporation to increase its authorized common stock. In addition, the Bios entities have agreed, subject to certain exceptions, not to sell, transfer or dispose of, directly or indirectly, any Series X Preferred Stock shares or Underlying Shares for a period ending April 30, 2029. In consideration of the agreements and waivers of the Bios entities, the Company issued to the Bios entities at the closing of the May 2026 Offering warrants to purchase 3,000,000 shares of the Company’s common stock at an exercise price of $1.00 per share. The warrants issued to the Bios entities are on substantially the same terms as the underwriter’s warrants, except for the exercise price.\n\nOn May 8, 2026, the Company granted Brian Windsor, Ph.D., the Company’s President and Chief Executive Officer, an option to purchase 150,000 shares of the Company’s common stock with an exercise price of $1.17 per share. In addition, the Company granted options to purchase an aggregate of 252,000 shares of the Company’s common stock to members of the Company’s management team, excluding the Chief Executive Officer. The options have a ten-year contractual term and vest as to 25% of the underlying shares one year from the grant date, with the remaining shares vesting in equal monthly installments through May 8, 2031. The management team options have an exercise price equal to the closing price of the Company’s common stock on May 7, 2026.\n\nThe Company evaluated subsequent events through the date of filing of this Quarterly Report on Form 10-Q and determined that no other events have occurred that would require adjustment to or disclosure in the unaudited condensed financial statements.\n\n \n\n \n\n22"}