nect Biopharma (US:CNTB)2025-08-13 13:04markdown Report Information [Form 10-Q Filing Details](index=1&type=section&id=Form%2010-Q%20Filing%20Details) This section provides the basic filing information for the Form 10-Q, including the reporting period, registrant details, and classification under SEC rules Registrant Information | Detail | Value | | :--- | :--- | | **Form Type** | Quarterly Report (10-Q) | | **Period Ended** | June 30, 2025 | | **Registrant Name** | Connect Biopharma Holdings Limited | | **Jurisdiction** | Cayman Islands | | **Principal Office** | San Diego, California 92130 | | **Commission File Number** | 001-40212 | | **Trading Symbol** | CNTB | | **Exchange** | The Nasdaq Global Market | | **Filer Status** | Non-accelerated filer, Smaller reporting company, Emerging growth company | - As of July 31, 2025, there were **55,721,657 ordinary shares outstanding**[4](index=4&type=chunk) [Explanatory Note](index=4&type=section&id=EXPLANATORY%20NOTE) Connect Biopharma Holdings Limited, a Cayman Islands company, qualifies as a 'foreign private issuer' but has voluntarily elected to file reports on U.S. domestic issuer forms (10-K, 10-Q, 8-K). The Company intends to maintain its foreign private issuer status, retaining exemptions from U.S. federal proxy rules, Regulation FD, and Section 16 reporting requirements for officers, directors, and principal shareholders - **Company is a 'foreign private issuer'** but voluntarily files on U.S. domestic issuer forms (10-K, 10-Q, 8-K)[9](index=9&type=chunk) - **Maintains foreign private issuer status**, exempt from U.S. federal proxy rules, Regulation FD, and Section 16 reporting[10](index=10&type=chunk) PART I. FINANCIAL INFORMATION [ITEM 1. Condensed Consolidated Financial Statements](index=5&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations and comprehensive income (loss), statements of shareholders' equity, and statements of cash flows, along with their accompanying notes, for the periods ended June 30, 2025 and December 31, 2024 (for balance sheet) or June 30, 2024 (for income/cash flow statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change (2025 vs 2024) | | :--- | :--- | :--- | :--- | | **ASSETS** | | | | | Cash and cash equivalents | $40,632 | $78,232 | -$37,600 | | Short-term investments | $31,136 | $15,476 | +$15,660 | | Total current assets | $77,756 | $96,961 | -$19,205 | | Total assets | $82,725 | $101,284 | -$18,559 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | | Accounts payable | $2,294 | $342 | +$1,952 | | Accrued liabilities | $7,933 | $7,802 | +$131 | | Total current liabilities | $10,741 | $8,462 | +$2,279 | | Total liabilities | $11,383 | $9,118 | +$2,265 | | Total shareholders' equity | $71,342 | $92,166 | -$20,824 | | Total liabilities and shareholders' equity | $82,725 | $101,284 | -$18,559 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Condensed Consolidated Statements of Operations (in thousands, except per share) | 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 | | :--- | :--- | :--- | :--- | :--- | | License and collaboration revenue | $48 | $24,116 | $48 | $24,116 | | Research and development expense | $8,773 | $5,348 | $15,406 | $14,011 | | General and administrative expense | $4,699 | $5,122 | $9,513 | $9,092 | | Total operating expenses | $13,472 | $10,470 | $24,919 | $23,103 | | (Loss) income from operations | $(13,424) | $13,646 | $(24,871) | $1,013 | | Net (loss) income | $(12,899) | $14,847 | $(23,171) | $6,154 | | Basic net (loss) income per ordinary share | $(0.23) | $0.27 | $(0.42) | $0.11 | | Diluted net (loss) income per ordinary share | $(0.23) | $0.27 | $(0.42) | $0.11 | [Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' Equity Changes (in thousands) | Item | Balance, Dec 31, 2024 | Balance, June 30, 2025 | Change | | :--- | :--- | :--- | :--- | | Additional Paid-In Capital | $439,357 | $441,413 | +$2,056 | | Accumulated Other Comprehensive Loss | $(1,666) | $(1,375) | +$291 | | Accumulated Deficit | $(345,355) | $(368,526) | -$23,171 | | Total Shareholders' Equity | $92,166 | $71,342 | -$20,824 | - **Net loss for the six months ended June 30, 2025, was $23,171 thousand**, contributing to the increase in accumulated deficit[19](index=19&type=chunk) - **Share-based compensation expense for the six months ended June 30, 2025, was $1,893 thousand**, increasing additional paid-in capital[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | Change (2025 vs 2024) | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(22,550) | $(8,286) | $(14,264) | | Net cash (used in) provided by investing activities | $(15,512) | $12,460 | $(27,972) | | Net cash provided by financing activities | $163 | $121 | +$42 | | Net (decrease) increase in cash and cash equivalents | $(37,600) | $4,176 | $(41,776) | | Cash and cash equivalents at end of year | $40,632 | $109,839 | $(69,207) | - The increase in net cash used in operating activities was primarily due to an **increase in net loss of $29.3 million**, partially offset by **net changes in operating assets and liabilities of $16.9 million**[114](index=114&type=chunk) - The decrease in cash provided by investing activities was primarily due to **net purchases of short-term investments of $15.1 million** in 2025, compared to **net maturities of $12.8 million** in 2024[115](index=115&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization and Business](index=13&type=section&id=1.%20Organization%20and%20Business) - Connect Biopharma is a clinical-stage biopharmaceutical company focused on asthma and COPD, advancing rademikibart, an anti-IL-4Rα antibody[25](index=25&type=chunk) - The Company plans to **terminate its ADR program** around **September 2, 2025**, and list its Ordinary Shares directly on Nasdaq under the existing symbol **'CNTB'**[26](index=26&type=chunk) - As of June 30, 2025, cash, cash equivalents, and short-term investments **totaled $71.8 million**, believed to be **sufficient for at least one year** of anticipated cash requirements[27](index=27&type=chunk) [2. Basis of Presentation and Significant Accounting Policies](index=13&type=section&id=2.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) - The Company voluntarily elected to become a domestic filer starting with its 2024 Annual Report on Form 10-K, while maintaining its Foreign Private Issuer status[28](index=28&type=chunk) - Financial statements are prepared in accordance with **U.S. GAAP** for interim financial information and **SEC rules**, with all necessary adjustments included[28](index=28&type=chunk) - **Significant accounting policies** involving judgment and estimates include revenue recognition, investments, accrued R&D expenses, income taxes, and share-based compensation[31](index=31&type=chunk) - **Effective January 1, 2025**, the Company adopted ASU 2023-09 (Income Taxes) prospectively, with **no material impact** on current disclosures[43](index=43&type=chunk)[44](index=44&type=chunk) - FASB issued ASU 2024-03 (Expense Disaggregation Disclosures), effective for annual periods beginning after December 15, 2026, which the Company is currently **evaluating**[45](index=45&type=chunk) [3. Fair Value Measurements](index=16&type=section&id=3.%20Fair%20Value%20Measurements) Fair Value Measurements of Financial Assets (in thousands) | Asset Type | Balance at June 30, 2025 | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Money market funds | $9,564 | $9,564 | $— | $— | | U.S. treasury bills | $9,928 | $9,928 | $— | $— | | U.S. government agency obligations | $8,917 | $— | $8,917 | $— | | U.S. corporate debt securities | $3,382 | $— | $3,382 | $— | | U.S. commercial paper | $6,930 | $— | $6,930 | $— | | Foreign commercial paper | $1,979 | $— | $1,979 | $— | | **Total** | **$40,700** | **$19,492** | **$21,208** | **$—** | - The Company measures cash, cash equivalents, and short-term investments at fair value on a recurring basis, with **no investments classified as Level 3**[46](index=46&type=chunk)[48](index=48&type=chunk) [4. Balance Sheet Details](index=17&type=section&id=4.%20Balance%20Sheet%20Details) Available-for-Sale Investments (June 30, 2025, in thousands) | Investment Type | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | | :--- | :--- | :--- | :--- | :--- | | U.S. treasury bills | $9,930 | $— | $(2) | $9,928 | | U.S. government agency obligations | $8,918 | $— | $(1) | $8,917 | | U.S. corporate debt securities | $3,382 | $— | $— | $3,382 | | U.S. commercial paper | $6,932 | $— | $(2) | $6,930 | | Foreign commercial paper | $1,980 | $— | $(1) | $1,979 | | **Total** | **$31,142** | **$—** | **$(6)** | **$31,136** | - For the three and six months ended June 30, 2025, the Company recorded **$6,000 and $7,000**, respectively, in **net unrealized losses** on available-for-sale investments, compared to net unrealized gains in 2024[52](index=52&type=chunk) Prepaid Expenses and Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepaid expenses | $5,567 | $2,149 | | Interest receivables | $193 | $262 | | Other assets | $228 | $53 | | **Total** | **$5,988** | **$2,464** | Accrued Liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued clinical, manufacturing and professional expense | $5,574 | $4,211 | | Accrued compensation and benefits | $1,656 | $3,342 | | Other accrued expenses | $703 | $249 | | **Total** | **$7,933** | **$7,802** | [5. License and Collaboration Agreement](index=18&type=section&id=5.%20License%20and%20Collaboration%20Agreement) - Connect HK and Connect SZ entered an exclusive license and collaboration agreement with Simcere Pharmaceutical Co., Ltd. on November 21, 2023, for rademikibart in Greater China[56](index=56&type=chunk)[57](index=57&type=chunk) - Simcere paid a non-refundable **upfront fee of approximately $21 million** and made **$5 million in milestone payments** in 2024. Remaining eligible milestone payments **total up to $110 million** as of June 30, 2025, after an **$8 million time-based milestone lapsed**[58](index=58&type=chunk) - The Company **recognized $48,000 in revenue** for cost reimbursements for clinical materials for the three and six months ended June 30, 2025, a **significant decrease from $24.1 million** in 2024 which included the upfront license fee and development milestones[62](index=62&type=chunk)[105](index=105&type=chunk) [6. Commitments and Contingencies](index=20&type=section&id=6.%20Commitments%20and%20Contingencies) - The Company was **not a party to any material litigation** and **did not have contingency reserves established for any liabilities** as of June 30, 2025, or December 31, 2024[71](index=71&type=chunk) [7. Leases](index=20&type=section&id=7.%20Leases) - In February 2025, the Company relocated its corporate headquarters in San Diego, California, recognizing an **initial ROU lease asset and liability of $0.9 million** for the new space **expiring January 31, 2028**[72](index=72&type=chunk) - As of June 30, 2025, the **weighted average remaining lease term was 2.4 years** (vs. **1.0 year** at Dec 31, 2024), and the **weighted average discount rate was 8.0%** (vs. **4.8%** at Dec 31, 2024)[74](index=74&type=chunk) Annual Future Minimum Lease Payments (as of June 30, 2025, in thousands) | Year | Amount | | :--- | :--- | | 2025 (remainder) | $211 | | 2026 | $371 | | 2027 | $354 | | 2028 | $30 | | **Total future minimum lease payments** | **$966** | | Less: amount representing interest | $(96) | | **Total lease liabilities** | **$870** | [8. Reorganization](index=21&type=section&id=8.%20Reorganization) - During Q2 and Q3 2024, the Company implemented executive leadership changes, **resulting in $3.2 million in total expenses** (**$2.0 million cash severance**, **$1.2 million non-cash share-based compensation**)[77](index=77&type=chunk) - Of the total expense, **$1.4 million was recognized** during the three and six months ended June 30, 2024 (**$0.7 million G&A**, **$0.7 million R&D**)[77](index=77&type=chunk) [9. Shareholders' Equity](index=21&type=section&id=9.%20Shareholders'%20Equity) - PRC subsidiaries have **not made profit appropriations** to the statutory surplus reserve fund due to accumulated losses[78](index=78&type=chunk) - **Restricted net assets of PRC subsidiaries were $28.1 million** as of June 30, 2025, and **$29.6 million** as of December 31, 2024[79](index=79&type=chunk) [10. Equity Incentive Plans](index=21&type=section&id=10.%20Equity%20Incentive%20Plans) Stock Option Activity (Six Months Ended June 30, 2025) | Activity | Number of Options | Weighted-Average Exercise Price | | :--- | :--- | :--- | | Outstanding at Dec 31, 2024 | 14,263,242 | $2.93 | | Granted | 1,104,000 | $0.78 | | Exercised | (26,500) | $0.76 | | Cancelled | (1,442,640) | $8.05 | | **Outstanding at June 30, 2025** | **13,898,102** | **$2.23** | Share-Based Compensation Expense (in thousands) | 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 | $253 | $954 | $584 | $1,561 | | General and administrative | $698 | $1,035 | $1,309 | $1,744 | | **Total** | **$951** | **$1,989** | **$1,893** | **$3,305** | - As of June 30, 2025, **$9.0 million of unrecognized compensation cost** related to non-vested, share-based payment awards is expected to be recognized over a **weighted-average period of 3.0 years**[81](index=81&type=chunk) - **Effective January 1, 2025**, the Company switched to the **Black-Scholes option pricing model** and the **simplified method for expected term estimation** for stock options, aligning with peers and limited exercise history[82](index=82&type=chunk) [11. Income Taxes](index=22&type=section&id=11.%20Income%20Taxes) Income Tax Expense and Effective Tax Rate | Period | Income Tax Expense (in thousands) | Effective Tax Rate | | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | $55 | (0.4)% | | Three Months Ended June 30, 2024 | $30 | 0.2% | | Six Months Ended June 30, 2025 | $109 | (0.5)% | | Six Months Ended June 30, 2024 | $60 | 1.0% | - The **effective tax rate** in both periods was primarily driven by the **full valuation allowance** maintained against the Company's deferred tax assets due to accumulated net losses[86](index=86&type=chunk)[88](index=88&type=chunk) - **Unrecognized tax benefits were $1.4 million** as of June 30, 2025, none of which would affect the effective tax rate if recognized[89](index=89&type=chunk) - The One Big Beautiful Bill Act (OBBBA) signed on July 4, 2025, is **not expected to have a material impact** on the Company's effective tax rate or consolidated financial statements[90](index=90&type=chunk) [12. Segment Reporting](index=23&type=section&id=12.%20Segment%20Reporting) - The Company operates in **one operating segment**: treatment of respiratory diseases, with the CEO acting as the **Chief Operating Decision-Maker (CODM)**[91](index=91&type=chunk) Segment Net Loss (Income) (in thousands) | 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 | | :--- | :--- | :--- | :--- | :--- | | License and collaboration revenue | $48 | $24,116 | $48 | $24,116 | | Research and development expense | $(8,773) | $(5,348) | $(15,406) | $(14,011) | | General and administrative expense | $(4,699) | $(5,122) | $(9,513) | $(9,092) | | Other income, net | $580 | $1,231 | $1,809 | $5,201 | | Income tax expense | $(55) | $(30) | $(109) | $(60) | | **Segment net loss (income)** | **$(12,899)** | **$14,847** | **$(23,171)** | **$6,154** | - **Long-lived tangible assets and ROU lease assets** were primarily located in the PRC (**$3.9 million**) and the U.S. (**$0.9 million**) as of June 30, 2025[92](index=92&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition, results of operations, and significant developments for the three and six months ended June 30, 2025, compared to the same periods in 2024. It includes forward-looking statements and discussions on liquidity, capital resources, and critical accounting estimates [Overview](index=24&type=section&id=Overview) - Connect Biopharma is a clinical-stage biopharmaceutical company focused on transforming care for asthma and COPD, advancing rademikibart, a next-generation anti-IL-4Rα antibody[95](index=95&type=chunk) [Significant Developments](index=24&type=section&id=Significant%20Developments) - Presented clinical and preclinical data for rademikibart at major conferences (ATS 2025, EAACI 2025), showing **significant improvement in airway function and reduction in acute exacerbations** for inflammation-mediated chronic asthma[97](index=97&type=chunk) - Preclinical data suggests rademikibart's **differentiated structural and molecular dynamics**, potentially offering **enhanced IL-4Rα inhibition** compared to dupilumab[97](index=97&type=chunk) - Collaborator Simcere submitted a **New Drug Application** for rademikibart in China for adult and adolescent AD, with Connect eligible for **up to $110 million** in remaining milestone payments and tiered royalties on net sales[98](index=98&type=chunk) - Company announced plans to **terminate its ADR program** and list ordinary shares directly on Nasdaq around **September 2, 2025**, under the existing symbol **'CNTB'**[99](index=99&type=chunk) - **Expanded Board of Directors to seven** and appointed James A. Schoeneck, an experienced biotech leader, as a new director in July 2025[100](index=100&type=chunk) [Critical Accounting Estimates](index=25&type=section&id=Critical%20Accounting%20Estimates) - **Preparation of financial statements requires estimates and judgments** in areas such as revenue recognition, investments, accrued R&D expenses, income taxes, and share-based compensation[101](index=101&type=chunk) - **Actual results may differ materially from estimates** under different assumptions or conditions[101](index=101&type=chunk) [Recent Accounting Pronouncements](index=25&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 2 of the condensed consolidated financial statements for details on recent accounting pronouncements[103](index=103&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Key Financial Performance Indicators (in thousands, except per share) | 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 | | :--- | :--- | :--- | :--- | :--- | | License and collaboration revenue | $48 | $24,116 | $48 | $24,116 | | Research and development expense | $8,773 | $5,348 | $15,406 | $14,011 | | General and administrative expense | $4,699 | $5,122 | $9,513 | $9,092 | | Other income, net | $580 | $1,231 | $1,809 | $5,201 | | Net (loss) income | $(12,899) | $14,847 | $(23,171) | $6,154 | | Basic net (loss) income per ordinary share | $(0.23) | $0.27 | $(0.42) | $0.11 | [License and Collaboration Revenues](index=25&type=section&id=License%20and%20Collaboration%20Revenues) - Revenue for Q2 and H1 2025 was **$48,000 in revenue** from cost reimbursements for clinical materials, a **significant decrease from $24.1 million** in Q2 and H1 2024, which included an upfront license fee and development milestones from the Simcere agreement[105](index=105&type=chunk) [Research and Development Expense](index=26&type=section&id=Research%20and%20Development%20Expense) Research and Development Expense Breakdown (in thousands) | 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 | | :--- | :--- | :--- | :--- | :--- | | Rademikibart-related costs | $5,753 | $1,412 | $9,409 | $7,096 | | Other development related costs | $8 | $181 | $81 | $444 | | Personnel costs and other expenses | $2,759 | $2,801 | $5,332 | $4,910 | | Share-based compensation expense | $253 | $954 | $584 | $1,561 | | **Total** | **$8,773** | **$5,348** | **$15,406** | **$14,011** | - **R&D expense increased to $8.8 million** (Q2 2025) and **$15.4 million** (H1 2025) primarily due to increased costs for rademikibart development, including the initiation of two Phase 2 clinical trials for asthma and COPD exacerbations[107](index=107&type=chunk) [General and Administrative Expense](index=26&type=section&id=General%20and%20Administrative%20Expense) - **G&A expense decreased to $4.7 million** for Q2 2025 (from **$5.1 million** in Q2 2024) mainly due to lower non-cash, share-based compensation expense[108](index=108&type=chunk) - **G&A expense increased to $9.5 million** for H1 2025 (from **$9.1 million** in H1 2024) due to higher professional fees for U.S.-centric efforts and increased personnel costs, partially offset by lower share-based compensation[109](index=109&type=chunk) [Other Income, Net](index=26&type=section&id=Other%20Income,%20Net) - **Other income, net, decreased to $0.6 million** (Q2 2025) and **$1.8 million** (H1 2025) from **$1.2 million and $5.2 million**, respectively, in 2024, primarily due to reduced government subsidies and interest income[110](index=110&type=chunk) [Reorganization](index=26&type=section&id=Reorganization) - Refer to Note 8 for details on the executive officer reorganization plan[111](index=111&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, cash, cash equivalents, and short-term investments **totaled $71.8 million**, projected to be **sufficient for at least one year**[112](index=112&type=chunk) Net (Loss) Income and Cash Flow from Operations (in thousands, except per share) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (2025 vs 2024) | | :--- | :--- | :--- | :--- | | Net (loss) income | $(23,171) | $6,154 | $(29,325) | | Net cash used in operating activities | $(22,550) | $(8,286) | $(14,264) | | Net cash (used in) provided by investing activities | $(15,512) | $12,460 | $(27,972) | | Net cash provided by financing activities | $163 | $121 | +$42 | - Historically, operations have been financed through **equity offerings** (including a **$219.9 million IPO** in March 2021) and collaborative arrangements[117](index=117&type=chunk) - **Future capital requirements are uncertain** and depend on R&D progress, regulatory outcomes, manufacturing costs, intellectual property, and market conditions[122](index=122&type=chunk) - The Company expects to finance future cash needs through **equity, debt, collaborations, or other strategic transactions**, acknowledging potential dilution or unfavorable terms[123](index=123&type=chunk) - **Global economic slowdown, high inflation, and recession risks may adversely affect business, operating costs, and ability to obtain financing**[124](index=124&type=chunk) [Material Cash Requirements](index=28&type=section&id=Material%20Cash%20Requirements) - **Operating lease obligations total $1.0 million** as of June 30, 2025, with **$0.2 million** due in the remainder of 2025 and **$0.8 million** due within the next two to three years, including a new San Diego headquarters lease expiring January 31, 2028[118](index=118&type=chunk)[119](index=119&type=chunk) - **Short-term purchase obligations consist of non-cancellable commitments** with third-party manufacturers, to be funded by current financial resources[120](index=120&type=chunk) - **Future costs for clinical trials, contract research organizations, and contract manufacturing organizations are variable and cannot be estimated with certainty**, but will be funded by current financial resources[121](index=121&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not required for smaller reporting companies, and therefore, no quantitative and qualitative disclosures about market risk are provided - **Not required for smaller reporting companies**[125](index=125&type=chunk) [ITEM 4. Controls and Procedures](index=29&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level. No material changes to internal control over financial reporting were identified during the quarter - Disclosure controls and procedures were evaluated and deemed **effective at the reasonable assurance level** as of June 30, 2025[128](index=128&type=chunk) - **No material changes to internal control over financial reporting occurred during the latest fiscal quarter**[129](index=129&type=chunk) PART II. OTHER INFORMATION [ITEM 1. Legal Proceedings](index=30&type=section&id=ITEM%201.%20Legal%20Proceedings) The Company is not currently involved in any material legal proceedings and is unaware of any pending or threatened legal actions that could adversely affect its business, operating results, or financial condition - **Not currently a party to any material legal proceedings**[131](index=131&type=chunk) - **No pending or threatened legal proceedings are believed to have an adverse effect on business, operating results, or financial condition**[131](index=131&type=chunk) [ITEM 1A. Risk Factors](index=30&type=section&id=ITEM%201A.%20Risk%20Factors) The Company operates in a dynamic environment with inherent risks. No material changes to the risk factors previously described in the 2024 Annual Report and Q1 2025 Form 10-Q were identified for this reporting period - **No material changes to the risk factors described in the 2024 Annual Report and Q1 2025 Form 10-Q were identified**[132](index=132&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period - **Not applicable**[133](index=133&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=30&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the reporting period - **Not applicable**[134](index=134&type=chunk) [ITEM 4. Mine Safety Disclosures](index=30&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period - **Not applicable**[135](index=135&type=chunk) [ITEM 5. Other Information](index=30&type=section&id=ITEM%205.%20Other%20Information) This item is not applicable for the reporting period - **Not applicable**[136](index=136&type=chunk) [ITEM 6. Exhibits](index=31&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications, XBRL documents, and other relevant agreements Key Exhibits Filed | Exhibit No. | Description | Filed/Furnished | | :--- | :--- | :--- | | 10.1† | Non-Employee Director Compensation Program | Filed | | 31.1 | Certification of Principal Executive Officer (Section 302) | Filed | | 31.2 | Certification of Principal Financial Officer (Section 302) | Filed | | 32.1 | Certifications of Principal Executive Officer and Principal Financial Officer (Section 906) | Furnished | | 101.INS | Inline XBRL Instance Document | Filed | | 104 | Cover Page Interactive Data File | Filed | - **Certifications under Exhibit 32.1 are furnished, not filed, and are not incorporated by reference into other Company filings**[138](index=138&type=chunk) SIGNATURES - Report signed by Barry D. Quart, Pharm.D., **CEO**, and Lisa Peraza, **SVP of Finance**, on **August 13, 2025**[142](index=142&type=chunk)