ArriVent BioPharma(AVBP) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information This section provides key administrative details of the Form 10-Q filing, including the reporting period, registrant information, and outstanding shares - This is a Quarterly Report on Form 10-Q for the period ended June 30, 2025[2] - The registrant, ARRIVENT BIOPHARMA, INC., is incorporated in Delaware with Commission file number 001-41929[2] Registrant Status | Status | Checkmark | | :---------------------- | :-------- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ⊠ | | Smaller reporting company | ☒ | | Emerging growth company | ☒ | - The number of outstanding shares of common stock as of August 8, 2025, was 40,568,944[4] Special Note Regarding Forward-Looking Statements This section cautions readers that the report contains forward-looking statements subject to risks and uncertainties, and the company undertakes no obligation to update them - The report contains forward-looking statements regarding future operations, financial position, business strategy, product candidates, clinical trials, regulatory approvals, and financial performance[5][6] - These statements involve known and unknown risks, uncertainties, and other important factors that may cause actual results to differ materially from those expressed or implied[5][7] - Readers are cautioned not to rely on forward-looking statements as predictions of future events and the company undertakes no obligation to update them, except as required by law[8] PART I — FINANCIAL INFORMATION This part presents the company's unaudited condensed financial statements and management's analysis of its financial condition and operations Item 1. Condensed Financial Statements (Unaudited) This section presents the unaudited condensed financial statements, including balance sheets, statements of operations and comprehensive loss, statements of convertible preferred stock and stockholders' equity (deficit), and statements of cash flows, along with detailed notes explaining the company's financial position, performance, and significant accounting policies Condensed Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Balance Sheet Highlights (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Cash and cash equivalents | $112,765 | $74,293 | +$38,472 | | Short-term investments | $122,922 | $144,570 | -$21,648 | | Total current assets | $250,149 | $226,979 | +$23,170 | | Total assets | $269,506 | $274,942 | -$5,436 | | Total current liabilities | $19,636 | $17,274 | +$2,362 | | Total liabilities | $19,636 | $17,288 | +$2,348 | | Accumulated deficit | $(334,119) | $(238,333) | -$95,786 | | Total stockholders' equity | $249,870 | $257,654 | -$7,784 | Condensed Statements of Operations and Comprehensive Loss This section outlines the company's financial performance over specific periods, including revenues, expenses, and net loss Condensed Statements of Operations Highlights (in thousands, except per share data) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $27,720 | $21,778 | $89,009 | $38,753 | | General and administrative | $5,903 | $3,919 | $11,386 | $7,618 | | Total operating expenses | $33,623 | $25,697 | $100,395 | $46,371 | | Operating loss | $(33,623) | $(25,697) | $(100,395) | $(46,371) | | Interest and investment income | $2,224 | $3,823 | $4,609 | $7,080 | | Net loss | $(31,399) | $(21,874) | $(95,786) | $(39,291) | | Net loss per share (basic and diluted)| $(0.90) | $(0.65) | $(2.78) | $(1.34) | Condensed Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) This section details changes in the company's equity structure, including common stock, additional paid-in capital, and accumulated deficit Stockholders' Equity Changes (in thousands, except share data) | Item | Balance Dec 31, 2024 | Balance June 30, 2025 | Change | | :------------------------------------ | :------------------- | :-------------------- | :----- | | Common stock shares outstanding | 33,706,765 | 37,490,439 | +3,783,674 | | Common stock amount | $3 | $4 | +$1 | | Additional paid-in capital | $496,195 | $584,003 | +$87,808 | | Accumulated deficit | $(238,333) | $(334,119) | -$95,786 | | Total stockholders' equity | $257,654 | $249,870 | -$7,784 | - Issuance of common stock, net of issuance costs, contributed $6.5 million and $75.3 million to equity during the six months ended June 30, 2025[23] - Stock-based compensation expense added $2.3 million and $3.3 million to additional paid-in capital during the six months ended June 30, 2025[23] Condensed Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(94,132) | $(37,715) | | Net cash provided by investing activities | $50,731 | $0 | | Net cash provided by financing activities | $81,873 | $185,995 | | Net (decrease) increase in cash and cash equivalents | $38,472 | $148,280 | | Cash and cash equivalents at end of year | $112,765 | $298,669 | - The increase in cash used in operating activities in H1 2025 was primarily due to a higher net loss, including a $40.0 million upfront payment for the Lepu collaboration[30][138] - Investing activities provided $50.7 million in H1 2025, mainly from maturities of marketable securities, compared to no cash provided in H1 2024[30][141] - Financing activities provided $81.9 million in H1 2025, primarily from 'at-the-market' (ATM) program sales, while H1 2024 saw $186.0 million from the initial public offering[30][143] Notes to Condensed Interim Financial Statements These notes provide detailed explanations and disclosures supporting the unaudited condensed financial statements, covering company background, liquidity, significant accounting policies, fair value measurements, specific balance sheet accounts, commitments, stock-based compensation, license agreements, segment information, common stock activities, debt, and subsequent events Note 1 Background This note provides an overview of the company's founding, its lead product candidate firmonertinib, and its initial public offering - ArriVent BioPharma, Inc. was founded on April 14, 2021, as a clinical-stage biopharmaceutical company[32] - The company's lead candidate, firmonertinib, a third-generation tyrosine kinase inhibitor, is being evaluated in multiple clinical trials for non-small cell lung cancer (NSCLC) with epidermal growth factor receptor mutations (EGFRm)[32] - The company completed its initial public offering (IPO) on January 30, 2024, raising net proceeds of $183.2 million[33] Note 2 Development Stage Risks and Liquidity This note discusses the company's accumulated deficit, expected increase in expenses, and its capital resources to fund future operations - The company has incurred losses since inception, with an accumulated deficit of $334.1 million as of June 30, 2025[34] - It expects research and development and general and administrative expenses to increase, necessitating additional capital[35] - The aggregate balance of cash, cash equivalents, and marketable securities ($254.5 million as of June 30, 2025), along with $81.1 million from a July 2025 public offering, is believed to be sufficient for planned operations through at least twelve months[36] Note 3 Summary of Significant Accounting Policies This note outlines the key accounting principles and methods used in preparing the financial statements, including estimates and new pronouncements Interim Financial Statements This sub-note confirms the preparation of unaudited interim financial statements in accordance with U.S. GAAP - The unaudited interim financial statements are prepared in accordance with U.S. GAAP and include all necessary normal recurring adjustments[40][41] Use of Estimates This sub-note explains that financial statement preparation requires management estimates and assumptions - Preparation of financial statements requires estimates and assumptions, particularly for the fair value of common stock (prior to IPO) and accrued research and development expenses[42][43] Fair Value Measurements This sub-note describes the company's approach to fair value measurements, categorizing inputs into a hierarchy - The company uses valuation techniques that maximize observable inputs, categorizing them into Level 1, Level 2, and Level 3 of the fair value hierarchy[44] - Carrying amounts of cash equivalents and accounts payable approximate fair value due to their short-term nature[45] Net Loss per Share This sub-note details the calculation of basic and diluted net loss per share and the treatment of potentially dilutive securities - Basic and diluted net loss per share are computed by dividing net loss by the weighted-average common shares outstanding[46] - Potentially dilutive securities, such as stock options, are excluded from diluted net loss per share calculation when a net loss exists, as their impact would be anti-dilutive[46][47] Accounting Pronouncements Not Yet Adopted This sub-note identifies new accounting pronouncements issued but not yet adopted by the company - FASB issued ASU 2024-03 (Expense Disaggregation Disclosures) in November 2024, effective for annual periods after December 15, 2026, which the company is evaluating for impact[48] Accounting Pronouncements Becoming Effective in 2025 This sub-note highlights new accounting pronouncements that become effective in 2025 - FASB issued ASU 2023-09 (Income Tax Disclosures) in December 2023, effective for annual periods after December 15, 2024, which the company is evaluating for impact[49] Reverse Stock Split This sub-note describes a reverse stock split that occurred and its retroactive adjustment to share and per-share amounts - A 15.21-for-1 reverse stock split of common stock was effected on January 23, 2024, with all share and per-share amounts retroactively adjusted[50] License and Collaboration Agreements This sub-note explains the accounting treatment for license and collaboration agreements, particularly regarding expense recognition - License and collaborative agreements are assessed under ASC 808; costs are recognized as research and development expense when incurred[51][52] - Clinical, regulatory, and development milestones are recognized as R&D expense only when deemed probable of achievement[52] Comprehensive Loss This sub-note defines comprehensive loss as including net loss and certain changes in stockholders' deficit - Comprehensive loss includes net loss and certain changes in stockholders' deficit, primarily unrealized gains or losses on marketable securities[53] Note 4 Fair Value Measurements This note details the valuation techniques and categorization of financial assets measured at fair value, primarily marketable securities Financial Assets Measured at Fair Value (in thousands) | Item | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :-------------------------- | :----------------------- | :--------------------------- | | Money market funds | $99,808 | $49,031 | | Corporate securities | $85,524 | $114,439 | | Government securities | $64,185 | $98,077 | | Total assets measured at fair value | $249,517 | $261,547 | - Money market funds are classified as Level 1, while corporate and government securities are primarily Level 2[55] - As of June 30, 2025, $131.0 million of fixed income securities have maturity dates within the next twelve months[57] Note 5 Prepaid Expenses and Other Current Assets This note provides a breakdown of prepaid expenses and other current assets, highlighting changes in research and development prepayments Prepaid Expenses and Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Research and development | $13,170 | $7,209 | | Professional fees | $130 | $233 | | Insurance | $657 | $174 | | Tax credit receivable | $505 | $500 | | Total prepaid expenses and other current assets | $14,462 | $8,116 | - Prepaid research and development expenses significantly increased from $7.2 million to $13.2 million[59] Note 6 Accrued Expenses This note details the composition of accrued expenses, including research and development, professional fees, and compensation Accrued Expenses (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Research and development | $11,814 | $8,626 | | Professional fees | $716 | $474 | | Compensation and related expenses | $2,792 | $4,163 | | Other accrued expenses | $156 | $67 | | Total accrued expenses | $15,478 | $13,330 | - Accrued research and development expenses increased by $3.2 million, while compensation and related expenses decreased by $1.4 million[60] Note 7 Commitments and Contingencies This note refers to the company's obligations under license and collaboration agreements, which involve potential contingent payments - The company is obligated to make contingent payments under various license and collaboration agreements, as described in Note 9[61] Note 8 Stock-based Compensation This note details the stock-based compensation expense recognized and the outstanding stock options, along with unrecognized compensation costs Stock-based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $1,495 | $418 | $2,480 | $652 | | General and administrative | $1,816 | $348 | $3,102 | $738 | | Total | $3,311 | $766 | $5,582 | $1,390 | - Total stock-based compensation expense increased significantly to $5.6 million for the six months ended June 30, 2025, from $1.4 million in the prior year[62] - As of June 30, 2025, 4,325,617 stock options were outstanding with a weighted-average exercise price of $15.46[63] - Unrecognized compensation cost for unvested awards was $44.1 million, to be expensed over a weighted-average period of 2.93 years[64] Note 9 License and Collaboration Agreements This note details the company's key license and collaboration agreements with Allist, Alphamab, Aarvik, and Lepu, outlining exclusive rights, upfront payments, potential milestone payments (clinical, regulatory, commercial), and tiered royalty obligations for various product candidates and technologies Allist Agreement This sub-note outlines the exclusive licensing agreement with Allist for firmonertinib outside Greater China, including milestone and royalty obligations - In June 2021, the company licensed exclusive rights to develop and commercialize firmonertinib outside Greater China from Allist[65] - The agreement includes potential future milestone payments of up to $105.0 million for clinical/regulatory achievements and $655.0 million for commercial milestones, plus tiered royalties on net sales[66] - Cost reimbursements to Allist under the Clinical Collaboration were $0.6 million for the six months ended June 30, 2025, and $0.3 million for the same period in 2024[67] Alphamab Agreement This sub-note describes the collaboration with Alphamab for novel antibody drug conjugates, detailing global rights, milestone payments, and royalties - In June 2024, the company entered a collaboration with Alphamab to discover, develop, and commercialize novel antibody drug conjugates (ADCs) for cancer, with exclusive global rights except Greater China[68][69] - The agreement includes potential milestone payments of up to $201.5 million for regulatory/development and $414.0 million for commercial achievements, plus tiered sales royalties[70] - During the six months ended June 30, 2025, the company paid $1.2 million upon approval of a target pair selection, recorded as R&D expense[71] Aarvik Collaboration Agreement This sub-note outlines the research collaboration with Aarvik, including an option exercise payment and future milestone and royalty obligations - In December 2021, the company entered a research collaboration with Aarvik, amended in June 2023[72] - In August 2024, the company paid $1.0 million to exercise an exclusive option to license Aarvik intellectual property[72] - Future obligations include up to $18.0 million per product for clinical/regulatory milestones and $80.0 million per product for commercial milestones, plus mid-single digit royalties[73] - R&D expenses related to Aarvik SOWs were $0.3 million for the six months ended June 30, 2025, compared to $1.0 million in 2024[75] Lepu Biopharma Agreement This sub-note details the licensing agreement with Lepu Biopharma for ARR-217, including upfront and milestone payments, and royalty obligations - On January 21, 2025, the company licensed exclusive rights to develop and commercialize ARR-217 (an ADC for GI cancers) outside Greater China from Lepu[76][77] - The agreement included a one-time upfront payment of $40.0 million (recorded as R&D expense) and a $1.0 million payment for the first developmental milestone in Q2 2025[77] - Lepu is eligible for up to $0.3 billion in development/regulatory milestones, $0.89 billion in commercial milestones, and tiered royalties[77] Note 10 Segment Information This note clarifies the company's single operating segment and details significant research and development expense categories - The company operates as a single reportable and operating segment: life science, focused on identifying, licensing, and globalizing biopharma innovations[79] - The Chief Operating Decision Maker (CODM) assesses performance based on net loss and uses cash forecast models to allocate resources[79][82] Significant R&D Expense Categories (in thousands) for Six Months Ended June 30, | Category | 2025 | 2024 | | :---------------------------------------------------------------- | :----- | :----- | | Firmonertinib (excluding personnel-related and other internal costs) | $30,786 | $24,233 | | Research and development: Discovery-stage programs | $44,606 | $6,614 | | Research and development: Personnel-related and other internal costs | $13,617 | $7,906 | | Total Research and Development | $89,009 | $38,753 | - Discovery-stage programs R&D expenses increased significantly in 2025, largely due to the $40.0 million upfront payment for the Lepu collaboration[83] Note 11 Common Stock This note describes the company's 'at-the-market' equity program, including shares sold and remaining availability for future issuances - On February 3, 2025, the company filed an automatic shelf registration statement (Form S-3ASR) for up to $250.0 million of common stock through an 'at-the-market' (ATM) equity program[85] - During the six months ended June 30, 2025, 3,693,224 shares of common stock were sold via the ATM program, generating $81.9 million in net proceeds[87] - As of June 30, 2025, approximately $164.9 million remained available for future issuances under the ATM program[87] Note 12 Debt This note details the company's loan and security agreement with Silicon Valley Bank, including the term loan amount and interest rate - On May 8, 2025, the company entered a Loan and Security Agreement with Silicon Valley Bank for a Term Loan of up to $75.0 million[88] - No amounts have been drawn on this Term Loan as of June 30, 2025[88] - The Term Loan matures on March 1, 2030 (or March 1, 2029, if certain conditions are not met) and bears interest at a variable annual rate, generally the greater of 6.00% or (Prime Rate - 0.75%)[89] Note 13 Subsequent Events This note discloses significant events occurring after the reporting period, including a public offering and new tax legislation - On July 3, 2025, the company closed an underwritten public offering, issuing common stock and pre-funded warrants, generating $81.1 million in net proceeds[91][92] - On July 4, 2025, the 'One Big Beautiful Bill Act' was enacted, allowing accelerated tax deductions for qualified R&D expenditures, the impact of which is being evaluated[94] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and liquidity, highlighting key developments in its clinical programs, financial performance for the three and six months ended June 30, 2025 and 2024, and future funding strategies Overview This section provides a high-level summary of the company's business, lead product candidate, clinical trial progress, and financial position - ArriVent BioPharma is a clinical-stage biopharmaceutical company focused on developing differentiated medicines for cancer, with an initial focus on solid tumors[96] - Its lead candidate, firmonertinib, is being evaluated in multiple clinical trials for EGFRm NSCLC, including a pivotal Phase 3 trial (FURVENT) for exon 20 insertion mutations[96][97][98] - Firmonertinib received FDA Breakthrough Therapy Designation in October 2023 and Orphan Drug Designation in February 2024 for NSCLC with EGFRm[96] - Interim data from the FAVOUR trial showed a 79% overall response rate (ORR) and 15.2-month median duration of response (DOR) in first-line EGFR exon 20 insertion mutations[99] - Interim data from the FURTHER trial (PACC mutations) showed a 64% ORR (Sept 2024) and, with 240 mg dose, 16.0 months median progression-free survival (PFS) and 14.6 months median DOR (June 2025)[100][101] - The company plans to initiate ALPACCA (FURMO-006), a randomized global Phase 3 study for PACC mutations, in the second half of 2025[102] - The company has incurred significant operating losses since inception, with an accumulated deficit of $334.1 million as of June 30, 2025, and expects losses to increase as it advances product candidates[107][110] Key Components of Our Results of Operations This section explains the primary drivers of the company's financial performance, including research and development, general and administrative expenses, and interest income - Research and development expenses are expensed as incurred, primarily related to firmonertinib development, preclinical studies, and manufacturing[111][112] - General and administrative expenses include salaries, legal fees, accounting, and insurance, expected to increase with continued R&D and potential commercialization[116] - Interest and investment income is derived from interest earned on cash, cash equivalents, and marketable securities[117] Results of Operations This section analyzes the company's financial performance for the three and six months ended June 30, 2025 and 2024, detailing changes in expenses and net loss Comparison of the Three Months Ended June 30, 2025 and 2024 This sub-section compares the company's financial results for the three-month periods, highlighting changes in operating expenses and net loss Financial Performance (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | Research and development | $27,720 | $21,778 | +$5,942 | | General and administrative | $5,903 | $3,919 | +$1,984 | | Total operating expenses | $33,623 | $25,697 | +$7,926 | | Operating loss | $(33,623) | $(25,697) | -$7,926 | | Interest and investment income | $2,224 | $3,823 | -$1,599 | | Net loss | $(31,399) | $(21,874) | -$9,525 | - Research and development expenses increased by $5.9 million, primarily due to increased costs for the FURVENT Phase 3 clinical trial ($2.8 million) and general firmonertinib costs ($3.3 million), partially offset by a decrease in discovery-stage programs ($2.6 million)[121] - General and administrative expenses rose by $2.0 million, mainly due to higher personnel-related costs and accounting/legal services[122] - Interest and investment income decreased by $1.6 million due to decreased invested balances[123] Comparison of the Six Months Ended June 30, 2025 and 2024 This sub-section compares the company's financial results for the six-month periods, emphasizing significant increases in research and development expenses Financial Performance (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | Research and development | $89,009 | $38,753 | +$50,256 | | General and administrative | $11,386 | $7,618 | +$3,768 | | Total operating expenses | $100,395 | $46,371 | +$54,024 | | Operating loss | $(100,395) | $(46,371) | -$54,024 | | Interest and investment income | $4,609 | $7,080 | -$2,471 | | Net loss | $(95,786) | $(39,291) | -$56,495 | - Research and development expenses surged by $50.3 million, primarily driven by a $38.0 million increase in discovery-stage programs (including a $40.0 million upfront payment for the Lepu collaboration) and a $6.6 million increase in firmonertinib costs[125] - General and administrative expenses increased by $3.8 million, mainly due to higher personnel-related costs and accounting/legal/software services[126] - Interest and investment income decreased by $2.5 million due to decreased invested balances[127] Liquidity and Capital Resources This section discusses the company's funding sources, future capital requirements, and cash flow activities, including recent financing events Sources of Liquidity This sub-section identifies the company's primary funding mechanisms, including equity offerings and a new loan agreement - Operations have been funded through convertible preferred stock ($305.0 million gross proceeds), an initial public offering ($183.2 million net proceeds in Q1 2024), and 'at-the-market' (ATM) offerings[128] - As of June 30, 2025, cash, cash equivalents, and marketable securities totaled $254.5 million[128] - The company sold 3,693,224 common shares through its ATM program for $81.9 million net proceeds during the six months ended June 30, 2025, with $164.9 million remaining for future issuances[130] - A $75 million loan and security agreement was entered with Silicon Valley Bank in May 2025, with no amounts drawn as of the report date[131] - A public offering closed on July 3, 2025, raising $81.1 million in net proceeds from common stock and pre-funded warrants[132] Future Funding Requirements This sub-section outlines the company's anticipated capital needs and strategies for securing additional financing to support its operations - Existing cash, cash equivalents, marketable securities, and July 2025 offering proceeds are expected to be sufficient for at least twelve months from the financial statements' issuance date[134] - Future capital requirements are dependent on the progress and costs of drug discovery, preclinical studies, clinical trials, regulatory approvals, manufacturing, and commercialization[135] - The company expects to finance future cash needs through public/private equity offerings, debt financings, collaborations, and licensing arrangements[136] Cash Flows This sub-section provides a detailed analysis of cash movements from operating, investing, and financing activities Summary of Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $(94,132) | $(37,715) | | Investing activities | $50,731 | $0 | | Financing activities | $81,873 | $185,995 | | Net (decrease) increase in cash and cash equivalents | $38,472 | $148,280 | - Net cash used in operating activities increased to $94.1 million in H1 2025, reflecting a higher net loss, including a $40.0 million upfront payment for the Lepu collaboration[138] - Net cash provided by investing activities was $50.7 million in H1 2025, primarily from maturities of marketable securities[141] - Net cash provided by financing activities was $81.9 million in H1 2025, mainly from ATM program sales, compared to $185.9 million in H1 2024 from the IPO[143] Contractual Obligations and Commitments This sub-section clarifies the company's long-term financial obligations, noting the absence of certain commitments and the nature of contingent payments - As of June 30, 2025, the company had no long-term obligations, capital lease obligations, or purchase obligations, except for operating leases[144] - Contingent milestone payments under license and collaboration agreements are not recorded as contractual obligations because their achievement is not probable as of June 30, 2025[145] Critical Accounting Policies, Significant Judgments and Use of Estimates This sub-section confirms no changes to the company's critical accounting policies from its previous annual report - There have been no changes to the company's critical accounting policies from those described in its Annual Report[147] JOBS Act and Emerging Growth Company Status This section explains the company's status as an emerging growth company and the implications for accounting standards and future compliance costs - The company is an emerging growth company (EGC) and a smaller reporting company, electing to use the extended transition period for new accounting standards[148] - It will transition out of EGC status by December 31, 2025, which is expected to result in significant additional legal, accounting, and compliance expenses[149] Recent Accounting Pronouncements This section refers to disclosures regarding new accounting pronouncements and their potential impact on the company's financial statements - A description of recent accounting pronouncements that may impact financial position, results of operations, or cash flows is disclosed in Note 3 to the financial statements[150] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section assesses the company's exposure to market risks, including interest rate risk, foreign currency risk, and the effects of inflation, concluding that these risks have not had a material impact on operations to date - The company's exposure to interest rate risk is not significant, with a hypothetical 1.0% change in market interest rates not materially impacting its portfolio value[151] - Foreign currency exchange rate fluctuations have not had a material effect on results of operations to date, as the company does not regularly incur material expenses in foreign currencies[152] - Inflation has not had a material effect on the company's results of operations during the periods presented, and no material impact is anticipated going forward[153] Item 4. Controls and Procedures This section details management's evaluation of the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and confirms no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[154][155] - There were no changes in internal control over financial reporting during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[156] PART II — OTHER INFORMATION This part provides additional information including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section states that the company is not currently a party to any legal proceedings expected to have a material adverse effect on its business, financial condition, or results of operations - The company is not currently a party to or aware of any legal proceedings that are believed to have a material adverse effect on its business, financial condition, or results of operations[157] Item 1A. Risk Factors This section refers readers to the risk factors detailed in the company's Annual Report on Form 10-K for December 31, 2024, and the Quarterly Report on Form 10-Q for March 31, 2025, indicating no additional material changes - There have been no additional material changes to the company's risk factors as set forth in its Annual Report on Form 10-K for December 31, 2024, and Quarterly Report on Form 10-Q for March 31, 2025[158] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities and confirms that the use of proceeds from the January 2024 initial public offering remains consistent with previously disclosed plans - There were no unregistered sales of equity securities during the period[159] - The company received net proceeds of $183.2 million from its initial public offering in January 2024[160] - There has been no material change in the planned use of proceeds from the initial public offering[161] Item 3. Defaults Upon Senior Securities This section states that there have been no defaults upon senior securities - There have been no defaults upon senior securities[162] Item 4. Mine Safety Disclosures This section reports no mine safety disclosures - There are no mine safety disclosures to report[163] Item 5. Other Information This section discloses that no directors or executive officers adopted, modified, or terminated Rule 10b5-1 trading plans during the fiscal quarter ended June 30, 2025 - None of the company's directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the fiscal quarter ended June 30, 2025[164] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents, agreements, certifications, and XBRL interactive data files - Exhibits include the Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Amended and Restated Non-Employee Director Compensation Policy, and the Loan and Security Agreement[168] - Certifications from the Chief Executive Officer and Chief Financial Officer are included, both pursuant to Rule 13a-15(e) or Rule 15d-15(e) and 18 U.S.C. Section 1350[168] - Interactive Data Files in Inline XBRL format are also provided as exhibits[168] Signatures This section contains the required signatures from the company's Chairman, President, and Chief Executive Officer, and Chief Financial Officer and Treasurer, certifying the filing of the report - The report was signed on August 11, 2025, by Zhengbin (Bing) Yao, Ph.D., Chairman, President and Chief Executive Officer, and Winston Kung, Chief Financial Officer and Treasurer[172]