UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to ___________________ Commission File Number: 001-39273 Lyra Therapeutics, Inc. (Exact Name of Registrant as Specified in its Charter) Dela ...

Product Development and Clinical Trials - LYR-210 is designed to provide up to six months of continuous anti-inflammatory drug therapy for chronic rhinosinusitis (CRS) patients with a single administration[20]. - LYR-220 is being developed for CRS patients who require ongoing treatment despite having undergone sinus surgery, with a Phase 2 clinical trial currently ongoing[22]. - The ENLIGHTEN program for LYR-210 consists of two pivotal trials and is currently ongoing, aiming for FDA approval through a 505(b)(2) New Drug Application[21]. - Phase 3 ENLIGHTEN I trial initiated in February 2022, targeting approximately 180 adult CRS patients who failed prior medical management[39]. - Phase 3 ENLIGHTEN II trial initiated in September 2022, also targeting approximately 180 adult CRS patients[42]. - Enrollment for ENLIGHTEN II paused to align with internal manufacturing timelines, expected to resume in Q2 2023[44]. - The Phase 2 BEACON trial for LYR-220 has completed enrollment in Part 2, which includes approximately 40 symptomatic adult CRS subjects who have had prior bilateral sinus surgery[64]. - The Phase 2 LANTERN trial showed statistically significant improvement in SNOT-22 score at week 24 with a change of -19.0 (p=0.001) for the 7,500 µg dose[49]. - Enrollment for Phase 2 LANTERN trial was discontinued at 67 patients due to COVID-19, below the planned 99 evaluable patients[45]. - The Phase 2 LANTERN clinical trial for LYR-210 enrolled 67 patients, falling short of the planned 99 evaluable patients, which impacted the trial's primary endpoint[166]. - The company has initiated a separate characterization study for LYR-210 to collect additional pharmacokinetic data due to enrollment challenges in the U.S.[167]. - The company has faced challenges in patient enrollment for clinical trials, which could delay regulatory approvals and increase costs[212]. Safety and Efficacy - LYR-210 Phase 1 trial achieved primary safety endpoint with 2,500 µg well tolerated over 24 weeks[37]. - Significant improvement in SNOT-22 scores observed, with an average change from baseline of -20.5 points at week 24 (p < 0.0001)[37]. - LYR-210 was safe and well tolerated, with no treatment-related serious adverse events reported[51]. - The most common reported adverse events in the Phase 1 trial included nasopharyngitis and upper respiratory tract infections, with one serious event deemed unrelated to LYR-210[57]. - In the Phase 2 LANTERN clinical trial, treatment-related adverse events were reported in 16 patients, with most being mild or moderate[218]. - LYR-210 demonstrated a durable response in approximately 50% of patients post-treatment, with no worsening of 4CS scores from the Week 24 baseline[52]. - At the 7,500 µg dose, LYR-210 achieved statistically significant improvement in 4CSS at week 16 (-1.47) (p=0.021), week 20 (-1.61) (p=0.012), and week 24 (-1.64) (p=0.016)[49]. Market Potential and Commercialization - Approximately 14 million people in the United States are affected by CRS, with an estimated 8 million treated annually by physicians, and about 4 million failing medical management each year[25]. - The company aims to build a commercialization infrastructure in the U.S. market for LYR-210 and LYR-220 upon FDA approval[28]. - LYR-220 is positioned to treat CRS patients post-surgery, addressing a market where no FDA-approved products currently exist for non-polyp patients[62]. - Approximately 40% of CRS patients present to ENT physicians have had prior surgery, representing a significant addressable market for LYR-220[61]. - LYR-210 is designed to be a preferred alternative to surgery, potentially reducing healthcare costs associated with surgical interventions[30]. - The company plans to build a targeted in-house sales force to engage ENT physicians who perform 80% of the CRS procedural volume[75]. Regulatory Environment - The FDA has a goal of 10 months to review and act on a standard New Drug Application (NDA) and 6 months for a priority NDA[101]. - The company must navigate extensive regulations for research, development, testing, and marketing of pharmaceutical products[91]. - The FDA may require submission of a risk evaluation and mitigation strategy (REMS) plan to ensure the benefits of the drug outweigh its risks[103]. - The FDA may accept foreign clinical trial data for NDA approval if conducted under IND or meets GCP requirements, potentially validating data through on-site inspections[107]. - The approval process for drug-device combinations like LYR-210 and LYR-220 may be more complex, potentially leading to delays[197]. - Regulatory approval pathways under Section 505(b)(2) may take longer and be more complicated than anticipated, impacting timelines[192]. - The company is subject to inspections by the FDA to ensure compliance with current Good Manufacturing Practice (cGMP) requirements before NDA approval[106]. Financial Performance and Funding - The company incurred operating losses of approximately $55.3 million and $43.5 million for the fiscal years ended December 31, 2022, and December 31, 2021, respectively[146]. - The company has not commercialized any products and has never generated any revenue from product sales[146]. - The company expects to continue incurring significant additional operating losses for the foreseeable future as it advances product candidates through pre-clinical and clinical development[147]. - The company will require substantial funds to further develop, manufacture, obtain approval for, and commercialize its product candidates, including LYR-210 and LYR-220[151]. - The company may need to raise additional capital through equity offerings or debt financings, which could dilute existing shareholders[154]. - The company believes its current cash and cash equivalents will be sufficient to fund operating expenses and capital expenditures into mid-2024[152]. - The company has devoted almost all of its financial resources to research and development, including pre-clinical development activities[146]. Intellectual Property - As of December 31, 2022, the company owns 24 issued U.S. patents and 16 foreign issued patents, with a focus on its technology LYR-210 and LYR-220[88]. - The first lineage of patents dates from 2009, providing potential protection until 2030, while the fourth lineage, filed in 2021, could provide protection until 2042[89]. - The LianBio License Agreement grants exclusive rights to develop and commercialize LYR-210 in Greater China and other territories[170]. - The company is subject to various obligations under its license agreements, which may divert management's attention from research and development[170]. Challenges and Risks - The company may face significant challenges in transitioning from a research and development focus to supporting commercial activities[144]. - The company may not successfully identify or commercialize additional product candidates, which could adversely affect its business strategy and financial position[175]. - Clinical trials are expensive and time-consuming, with high risks of failure that could impair the ability to commercialize product candidates[178]. - The unpredictability of clinical trial results poses a significant risk to the company's ability to obtain regulatory approval for its product candidates[208]. - The company may experience delays in clinical trials due to various factors, including regulatory disagreements and patient recruitment challenges[180]. - Serious adverse events during clinical trials could lead to interruptions or halts in development, affecting the company's prospects[217]. - The company has experienced delays in regulatory inspections due to the COVID-19 pandemic, which may impact its ability to submit regulatory applications[211].

INVESTOR PRESENTATION NOVEMBER 2022 DISCLAIMER This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the company's clinical advancement and efficacy of LYR-210 and LYR220 for the treatment of CRS and our expectations regarding the LYR-210 Phase 3 ENLIGHTEN prog ...

PART I. FINANCIAL INFORMATION [Condensed Consolidated Financial Statements (unaudited)](index=7&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Unaudited financial statements for the period ended September 30, 2022, reflect significant asset growth from financing, continued net losses, and increased operating expenses for clinical development [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2022, the balance sheet reflects substantial increases in liquidity and stockholders' equity from April 2022 financing, alongside a widening accumulated deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $109,558 | $45,747 | | Total current assets | $112,230 | $47,918 | | Total assets | $119,463 | $54,867 | | **Liabilities & Equity** | | | | Total liabilities | $26,241 | $20,551 | | Accumulated deficit | $(234,440) | $(193,397) | | Total stockholders' equity | $93,222 | $34,316 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the three and nine months ended September 30, 2022, the company reported increased net losses driven by significantly higher operating expenses, particularly R&D costs for clinical trials Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $359 | $14 | $1,352 | $14 | | Research and development | $10,048 | $7,077 | $29,346 | $19,352 | | General and administrative | $5,137 | $4,018 | $13,157 | $10,639 | | Loss from operations | $(14,826) | $(11,081) | $(41,151) | $(29,977) | | Net loss | $(14,766) | $(11,055) | $(41,043) | $(29,896) | | Net loss per share | $(0.40) | $(0.85) | $(1.47) | $(2.30) | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity significantly increased to **$93.2 million** by September 30, 2022, primarily due to **$96.3 million** net proceeds from Q2 2022 stock and warrant issuance, partially offset by net losses - In the second quarter of 2022, the company issued common stock and pre-funded warrants, resulting in net proceeds of **$96.25 million** after issuance costs[24](index=24&type=chunk) - The accumulated deficit increased from **$193.4 million** at December 31, 2021, to **$234.4 million** at September 30, 2022, reflecting ongoing net losses[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2022, net cash used in operating activities significantly increased, while net cash provided by financing activities from the April 2022 stock sale led to a substantial net increase in cash Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(31,221) | $(14,523) | | Net cash used in investing activities | $(136) | $(2,302) | | Net cash provided by financing activities | $96,257 | $363 | | **Net increase (decrease) in cash** | **$64,900** | **$(16,462)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail the company's clinical-stage operations, liquidity position, and significant agreements, including the April 2022 financing and LianBio collaboration revenue recognition - The company is a clinical-stage therapeutics company focused on ENT diseases with an accumulated deficit of approximately **$234.4 million** at September 30, 2022[30](index=30&type=chunk)[32](index=32&type=chunk) - Management believes cash and cash equivalents of **$109.6 million** as of September 30, 2022, will be sufficient to fund operations for at least one year[32](index=32&type=chunk)[33](index=33&type=chunk) - In April 2022, the company raised gross proceeds of approximately **$100.5 million** (**$96.3 million** net) through a private placement of common stock and pre-funded warrants[56](index=56&type=chunk) - The LianBio License Agreement included a **$12.0 million** upfront payment and a **$5.0 million** development milestone payment received in February 2022, with revenue recognized as performance obligations are satisfied[83](index=83&type=chunk)[87](index=87&type=chunk)[90](index=90&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes the company's ENT disease focus, clinical trial advancements, operational adjustments, increased operating losses, and enhanced liquidity from recent financing - The company's lead product candidate, LYR-210, is in a Phase 3 program (ENLIGHTEN I and ENLIGHTEN II) for surgery-naïve CRS patients[105](index=105&type=chunk) - Enrollment in the ENLIGHTEN II trial was paused to align with internal manufacturing timelines for clinical trial supply, with resumption expected in Q3 2023[107](index=107&type=chunk) Results of Operations Comparison (in thousands) | Period | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | :--- | | **Three Months** | R&D Expenses | $10,048 | $7,077 | $2,971 | | | G&A Expenses | $5,137 | $4,018 | $1,119 | | | Net Loss | $(14,766) | $(11,055) | $(3,711) | | **Nine Months** | R&D Expenses | $29,346 | $19,352 | $9,994 | | | G&A Expenses | $13,157 | $10,639 | $2,518 | | | Net Loss | $(41,043) | $(29,896) | $(11,147) | - As of September 30, 2022, the company had cash and cash equivalents of **$109.6 million**, which is expected to fund operations and capital expenditures through mid-2024[117](index=117&type=chunk)[165](index=165&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Lyra Therapeutics is not required to provide quantitative and qualitative disclosures about market risk[171](index=171&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management identified a material weakness in internal control over financial reporting, resulting in financial statement restatements and ineffective disclosure controls, with a remediation plan underway - A material weakness was identified in internal control over financial reporting concerning the allocation of the transaction price for the LianBio License Agreement[175](index=175&type=chunk) - This material weakness resulted in a restatement of the financial statements for the three months ended March 31, 2022, and the three and six months ended June 30, 2022[175](index=175&type=chunk) - As a result of the material weakness, the CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of September 30, 2022[173](index=173&type=chunk) - A remediation plan is underway, which includes enhancing review procedures for complex transactions and augmenting staff with outside technical accounting resources[176](index=176&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in legal claims or actions expected to materially adversely affect its financial condition or operations - Management believes there are currently no pending claims or actions against the company that would have a material adverse effect on its business[181](index=181&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The company outlines numerous material risks, including ongoing operating losses, capital needs, internal control weaknesses, high dependency on LYR-210, clinical trial uncertainties, reliance on third parties, and market acceptance challenges - The company has a history of significant operating losses and expects to incur additional losses for the foreseeable future, requiring substantial additional funding to continue operations[186](index=186&type=chunk)[190](index=190&type=chunk) - A material weakness in internal control over financial reporting was identified, which, if not remediated, could adversely affect the business and stock price[197](index=197&type=chunk) - The business is highly dependent on the success of its most advanced product candidate, LYR-210, which faces uncertain clinical trial outcomes and regulatory approval processes[205](index=205&type=chunk) - The company relies on third parties for manufacturing and conducting clinical trials, which introduces risks related to supply, quality control, and trial execution[350](index=350&type=chunk)[355](index=355&type=chunk) - The COVID-19 pandemic has previously disrupted clinical trials, such as the Phase 2 LANTERN trial, and may continue to adversely impact business operations[411](index=411&type=chunk)[412](index=412&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=91&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - The company reported no unregistered sales of equity securities for the period[448](index=448&type=chunk) [Defaults Upon Senior Securities](index=91&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - The company reported no defaults upon senior securities[448](index=448&type=chunk) [Mine Safety Disclosures](index=92&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable to the company's operations[449](index=449&type=chunk) [Other Information](index=92&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - The company reported no other information for the period[450](index=450&type=chunk) [Exhibits](index=93&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including agreement amendments and officer certifications - Exhibits filed include the First Amendment to the License and Collaboration Agreement with LianBio and certifications required by the Sarbanes-Oxley Act[451](index=451&type=chunk)

Correlation between SNOT-22 and cardinal symptom composite scores in CRS Brent A. Senior, MD1*, Anders Cervin, MD, PhD2, Joanne Rimmer, MD3, Agnieszka Wrobel, MD, PhD4, Lindsay Brayton, BA5, James Shao, MS5, Vineeta Belanger, PhD5, Robert C. Kern, MD6 1Department of Otolaryngology - Head & Neck Surgery, University of North Carolina, Chapel Hill, NC, USA; 2University of Queensland Centre for Clinical Research, Royal Brisbane & Women's Hospital Campus, Herston, QLD, Australia; 3Monash Health and Department of ...

Dedicated to transforming the lives of patients with debilitating chronic diseases through local, targeted drug therapy INVESTOR PRESENTATION AUGUST 2022 DISCLAIMER This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the company's clinical advancement and eff ...

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=7&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Unaudited H1 2022 financials show cash increased to **$120.7 million** from financing, **$5.8 million** collaboration revenue, and a **$21.5 million** net loss [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects a substantial increase in cash and stockholders' equity driven by recent financing activities Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $120,669 | $45,747 | | Total current assets | $122,381 | $47,918 | | Total assets | $130,035 | $54,867 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $9,872 | $18,246 | | Total liabilities | $19,005 | $20,551 | | Total stockholders' equity | $111,030 | $34,316 | | Total liabilities and stockholders' equity | $130,035 | $54,867 | - Cash and cash equivalents increased significantly from **$45.7 million** at the end of 2021 to **$120.7 million** as of June 30, 2022, driven by financing activities[20](index=20&type=chunk) - Total stockholders' equity more than tripled, increasing from **$34.3 million** to **$111.0 million**, reflecting the issuance of new common stock and warrants[20](index=20&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Operations show new collaboration revenue and increased R&D expenses, leading to a higher net loss for the period Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $407 | $0 | $5,774 | $0 | | Research and development | $10,793 | $7,505 | $19,298 | $12,275 | | General and administrative | $4,132 | $3,560 | $8,020 | $6,621 | | Loss from operations | ($14,518) | ($11,065) | ($21,544) | ($18,896) | | Net loss | ($14,484) | ($11,039) | ($21,496) | ($18,841) | | Net loss per share | ($0.43) | ($0.85) | ($0.91) | ($1.45) | - The company recognized **$5.8 million** in collaboration revenue in the first six months of 2022, a new revenue stream compared to the same period in 2021[23](index=23&type=chunk) - Both Research and Development and General and Administrative expenses increased year-over-year for both the three and six-month periods, contributing to a larger net loss[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow statements highlight significant cash generation from financing activities offsetting increased operating cash burn Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($20,375) | ($4,209) | | Net cash used in investing activities | ($107) | ($1,785) | | Net cash provided by financing activities | $96,493 | $447 | | Net increase (decrease) in cash | $76,011 | ($5,547) | - Financing activities provided **$96.5 million** in cash during the first six months of 2022, primarily from the sale of common stock and pre-funded warrants[28](index=28&type=chunk) - Net cash used in operating activities increased significantly to **$20.4 million** from **$4.2 million** in the prior year period, reflecting higher net losses and changes in working capital[28](index=28&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's liquidity position, recent financing events, and collaboration revenue recognition - The company believes its cash and cash equivalents of **$120.7 million** as of June 30, 2022, are sufficient to fund operations for at least one year, but will require additional financing to support long-term strategy[34](index=34&type=chunk) - In April 2022, the company closed a private placement of common stock and pre-funded warrants, resulting in gross proceeds of approximately **$100.5 million**[54](index=54&type=chunk) - Under the LianBio License Agreement, the company received a **$12.0 million** upfront payment and is eligible for up to **$135.0 million** in future milestone payments. For the six months ended June 30, 2022, the company recognized **$5.8 million** in collaboration revenue, including a **$5.0 million** milestone achievement[81](index=81&type=chunk)[87](index=87&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses clinical-stage focus, increased R&D, new collaboration revenue, and strengthened liquidity from recent financing - The company is a clinical-stage therapeutics company focused on developing and commercializing treatments for ear, nose, and throat (ENT) diseases using its proprietary XTreo platform. Its lead product candidates are LYR-210 and LYR-220 for chronic rhinosinusitis (CRS)[95](index=95&type=chunk) - The LYR-210 Phase 3 program, consisting of two pivotal trials (ENLIGHTEN I and ENLIGHTEN II), was initiated in January 2022[100](index=100&type=chunk) - The company believes its existing cash and cash equivalents of **$120.7 million** as of June 30, 2022, will be sufficient to fund operations and capital expenditures into mid-2024[113](index=113&type=chunk)[160](index=160&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Operating results show new collaboration revenue, increased R&D and G&A expenses, and a higher net loss year-over-year Comparison of Operating Results (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Collaboration Revenue | $407 | $0 | $5,774 | $0 | | R&D Expenses | $10,793 | $7,505 | $19,298 | $12,275 | | G&A Expenses | $4,132 | $3,560 | $8,020 | $6,621 | | Net Loss | ($14,484) | ($11,039) | ($21,496) | ($18,841) | - For the six months ended June 30, 2022, collaboration revenue was **$5.8 million**, resulting from the LianBio agreement, including a **$5.0 million** development milestone[146](index=146&type=chunk) - R&D expenses for the six months ended June 30, 2022 increased by **$7.0 million** year-over-year, primarily due to a **$4.6 million** increase in clinical development costs for the ENLIGHTEN I Phase 3 trial and a **$1.8 million** increase in employee-related costs[147](index=147&type=chunk)[148](index=148&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily from financing activities, with significant cash provided by the April 2022 financing - The company's primary sources of liquidity have been proceeds from preferred stock sales, its IPO (**$57.3M** net), the April 2022 Financing (**$96.3M** net), and the LianBio collaboration agreement (**$12.0M** gross)[152](index=152&type=chunk) - Net cash provided by financing activities was **$96.5 million** for the first six months of 2022, a significant increase from **$0.4 million** in the same period of 2021, due to the April 2022 Financing[158](index=158&type=chunk) - The company expects expenses to increase as it continues R&D, initiates later-stage clinical trials for its product candidates, and prepares for potential commercialization[159](index=159&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is a smaller reporting company and is not required to provide the information for this item - As a smaller reporting company defined in Rule 12b-2 of the Exchange Act, Lyra Therapeutics is not required to provide quantitative and qualitative disclosures about market risk[167](index=167&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[169](index=169&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[170](index=170&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any legal claims or actions expected to materially affect its financial condition or operations - Management believes there are currently no pending claims or actions against the company that would have a material adverse effect on its results of operations or financial condition[173](index=173&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company outlines numerous risks across financial, developmental, commercial, third-party reliance, intellectual property, and operational areas - The company has a history of significant operating losses (**$21.5 million** for the six months ended June 30, 2022) and expects to incur additional losses for the foreseeable future, with no guarantee of ever achieving profitability[178](index=178&type=chunk) - The business is highly dependent on the success of its most advanced product candidate, LYR-210, which failed to meet the primary endpoint of its Phase 2 LANTERN clinical trial, a failure attributed primarily to enrollment discontinuation due to the COVID-19 pandemic[192](index=192&type=chunk)[195](index=195&type=chunk) - The company relies on third parties for the manufacturing of its product candidates and to conduct its clinical trials, which increases risks related to supply sufficiency, quality control (cGMP compliance), and trial execution (GCP compliance)[342](index=342&type=chunk)[346](index=346&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=88&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company references its Form 8-K for unregistered equity sales and confirms no material change in IPO proceeds use - The company's unregistered sales of equity securities during the quarter ended June 30, 2022, are detailed in the Current Report on Form 8-K filed on April 13, 2022[436](index=436&type=chunk) - There has been no material change in the planned use of proceeds from the company's IPO as described in its final prospectus[439](index=439&type=chunk) [Item 3. Defaults Upon Senior Securities](index=88&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - The company reports no defaults upon senior securities[440](index=440&type=chunk) [Item 4. Mine Safety Disclosures](index=88&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[441](index=441&type=chunk) [Item 5. Other Information](index=88&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - The company reports no other information for this item[442](index=442&type=chunk) [Item 6. Exhibits](index=89&type=section&id=Item%206.%20Exhibits) This section lists Form 10-Q exhibits, including corporate governance, lease agreements, inducement award plan amendments, and officer certifications - Exhibits filed include a new Lease Agreement dated May 31, 2022, amendments to the 2022 Inducement Award Plan, and an Employment Agreement with Dr. Richard Nieman[444](index=444&type=chunk)

Dedicated to transforming the lives of patients with debilitating chronic diseases through local, targeted drug therapy INVESTOR PRESENTATION JULY 2022 DISCLAIMER This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the company's clinical advancement and effic ...

Dedicated to transforming the lives of patients with debilitating chronic diseases through local, targeted drug therapy INVESTOR PRESENTATION JUNE 2022 DISCLAIMER This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the company's clinical advancement and effic ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to ___________________ Commission File Number: 001-39273 Lyra Therapeutics, Inc. (Exact Name of Registrant as Specified in its Charter) (Sta ...