Kintara Therapeutics(KTRA) - 2025 Q4 - Annual Report

FORM 10-Q Cover Page Provides essential corporate identification, filer status, and outstanding common stock information for TUHURA BIOSCIENCES, INC - TUHURA BIOSCIENCES, INC. is a Nevada corporation with Commission File Number 001-37823. Its common stock trades on The Nasdaq Capital Market LLC under the symbol HURA[2] Filer Status | Filer Status | Value | | :------------- | :---- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☒ | | Emerging growth company | ☐ | - As of August 11, 2025, the registrant had 50,046,926 shares of common stock, $0.001 par value per share, outstanding[3] Table of Contents Outlines the report's structure, detailing financial and other information sections with corresponding page numbers - The Table of Contents outlines the structure of the Form 10-Q, dividing it into PART I (Financial Information) and PART II (Other Information), detailing specific items and their corresponding page numbers[6] SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Cautions readers about forward-looking statements, emphasizing inherent risks and uncertainties that may cause actual results to differ materially - This section highlights that the report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from projections[8] - Key forward-looking statements include financial performance, ability to fund operations and continue as a going concern, intellectual property rights, anticipated benefits and costs of the Kineta Merger, clinical study outcomes, regulatory approvals, and the therapeutic potential of product candidates like IFx-2.0, IFx-3.0, and TBS-2025[9] - Readers are cautioned not to place undue reliance on these statements and are advised to review the 'Risk Factors' section in this 10-Q and the 2024 Annual Report for more details[10][11] PART I. FINANCIAL INFORMATION Presents the company's comprehensive financial data, including condensed consolidated statements and detailed notes for the reporting period Item 1. Condensed Financial Statements. This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, liquidity, acquisitions, and other financial details for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets Presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Cash and cash equivalents | $8,512,824 | $12,657,178 | | Total Current Assets | $12,539,459 | $19,610,389 | | Goodwill | $13,554,163 | $- | | In-process research and development | $8,261,000 | $- | | Total Assets | $34,621,304 | $19,966,684 | | Total Current Liabilities | $15,171,776 | $5,330,010 | | Total Liabilities | $15,171,776 | $5,372,708 | | Total Stockholders' Equity | $19,449,528 | $14,593,976 | - Total assets increased significantly from $19.97 million at December 31, 2024, to $34.62 million at June 30, 2025, primarily due to the acquisition of Kineta, which introduced goodwill and in-process research and development assets[15] - Current liabilities also saw a substantial increase from $5.33 million to $15.17 million, largely driven by accounts payable and accrued expenses, a note payable, and holdback liability assumed from the Kineta Merger[15] Condensed Consolidated Statements of Operations Details the company's financial performance, including revenues, expenses, and net loss for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations Highlights | Metric | 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 expenses | $4,926,936 | $2,823,064 | $9,508,608 | $6,412,077 | | General and administrative expenses | $4,949,020 | $795,660 | $7,384,371 | $1,812,401 | | Operating Loss | $(9,875,956) | $(3,618,724) | $(16,892,979) | $(8,224,478) | | Grant income | $322,655 | $- | $575,209 | $- | | Interest expense | $- | $(1,357,458) | $- | $(1,612,580) | | Net Loss | $(9,523,835) | $(5,265,235) | $(16,188,206) | $(10,107,377) | | Net Loss per share, basic and diluted | $(0.21) | $(0.43) | $(0.36) | $(0.83) | - Net loss increased significantly for both the three-month and six-month periods ended June 30, 2025, compared to 2024, primarily driven by higher research and development expenses and a substantial increase in general and administrative expenses[17] - Grant income of $322,655 (three months) and $575,209 (six months) was recognized in 2025, which was not present in 2024, partially offsetting increased expenses[17] Condensed Consolidated Statements of Stockholders' Equity (Deficit) Outlines changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit for the six months ended June 30, 2025 - Total stockholders' equity increased from $14,593,976 at January 1, 2025, to $19,449,528 at June 30, 2025, despite accumulated deficits[20] - Significant increases in additional paid-in capital were driven by the issuance of common shares for warrants exercised ($3,560,907), stock compensation expense ($1,424,736 and $1,407,047), issuance of common shares net of costs ($8,196,116), and common shares issued for the Kineta merger ($6,393,149)[20] - The accumulated deficit grew from $(111,124,569) at January 1, 2025, to $(127,316,953) at June 30, 2025, reflecting the net losses incurred during the period[20] Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash flows from Operating activities | $(10,986,584) | $(8,900,053) | | Net cash flows from Investing activities | $(1,307,511) | $(36,498) | | Net cash flows from Financing activities | $8,149,741 | $17,582,805 | | Net change in cash and cash equivalents | $(4,144,354) | $8,646,254 | | Cash and cash equivalents at end of period | $8,512,824 | $12,311,286 | - Net cash used in operating activities increased to $11.0 million for the six months ended June 30, 2025, from $8.9 million in the prior year, primarily due to higher net losses[22] - Investing activities used $1.3 million in 2025, significantly higher than $36,498 in 2024, mainly due to the cash paid for the Kineta business acquisition[22] - Net cash provided by financing activities decreased to $8.1 million in 2025 from $17.6 million in 2024, reflecting proceeds from warrants exercised and common stock issuance, but lower than prior year's convertible notes proceeds[22] Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements, covering accounting policies, acquisitions, and other financial specifics Note 1—Description of business and basis of presentation Describes TuHURA Biosciences' core business as a clinical-stage immuno-oncology company, its technology platforms, and recent strategic developments including a Phase 3 trial and the Kineta acquisition - TuHURA Biosciences, Inc. is a clinical-stage immuno-oncology company developing novel therapeutics to overcome cancer immunotherapy resistance, utilizing three distinct technology platforms: Immune FxTM (IFx), TBS-2025 (VISTA-inhibiting monoclonal antibody), and Delta Opioid Receptor technology[24][25][26][27] - In June 2025, the company initiated a Phase 3 registration trial for its lead product candidate, IFx-2.0, for advanced or metastatic Merkel cell carcinoma, leveraging the FDA's accelerated approval pathway[25][30] - The company completed the acquisition of Kineta on June 30, 2025, gaining rights to TBS-2025, a VISTA-inhibiting monoclonal antibody, and plans to investigate it in a Phase 2 trial for mutated NPM1 AML[26][33] - A private placement in June 2025 raised approximately $12.6 million through the issuance of common stock and warrants, with $8.9 million purchased by June 30, 2025, tied to clinical and merger milestones, and the remaining $3.7 million due by December 31, 2025[29][30][31] Note 2—Summary of significant accounting policies Outlines the key accounting principles applied in preparing the financial statements, including consolidation, R&D expensing, business acquisitions, and stock-based compensation - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include the accounts of TuHURA and its wholly-owned subsidiaries, with all intercompany balances eliminated[36][37] - Research and development expenses are expensed as incurred, and the company adopted ASU 2023-07, Segment Reporting, which did not materially impact its financial statements, operating in one reportable segment focused on cancer treatment[40][46][47] - The company accounts for acquired businesses using the acquisition method, recognizing goodwill and in-process research and development (IPR&D) as indefinite-lived intangible assets, subject to annual impairment testing[43][45] - Stock-based awards are accounted for using the fair value-based method, with fair value estimated using the Black-Scholes valuation model[42] Note 3—Liquidity and management's plans Addresses the company's financial liquidity, historical negative cash flows, current cash position, and plans to secure additional funding to continue operations - The company has historically incurred negative cash flows from operations, with $11.0 million used in the six months ended June 30, 2025[52][53] - As of June 30, 2025, cash and cash equivalents totaled $8.5 million, which, along with anticipated remaining funds from the Securities Purchase Agreement, is expected to fund operations into the late fourth quarter of 2025[53] - Management expects to raise additional capital through equity sales, debt issuances, grants, or commercial partnerships, but there is substantial doubt about the company's ability to continue as a going concern for the next 12 months without further funding[55] Note 4—Acquisition Details the acquisition of Kineta, including the purchase consideration, assets acquired, liabilities assumed, and the resulting goodwill and in-process research and development - On June 30, 2025, TuHURA acquired 100% of Kineta, a clinical-biotechnology company, gaining control over its VISTA blocking immunotherapy (renamed TBS-2025) and related intellectual property[56] Preliminary Allocation of Kineta Acquisition Consideration (June 30, 2025) | Category | Amount | | :-------------------------------------------------- | :------------- | | Purchase Consideration | | | Exclusivity cash deposit | $5,994,502 | | Equity issued to Kineta shareholders | $6,396,017 | | Holdback liability to be issued in equity | $2,519,644 | | Cash previously advanced for clinical trial funding and working capital | $1,650,000 | | Fair value of consideration | $16,560,163 | | Assets Acquired | | | Cash | $390,721 | | Acquired in-process research and development | $8,261,000 | | Total assets acquired | $8,651,721 | | Liabilities Assumed | | | Accrued expenses, assumed debt, and severance liabilities | $(5,645,721) | | Total liabilities assumed | $(5,645,721) | | Net assets acquired | $3,006,000 | | Goodwill | $13,554,163 | - The acquisition resulted in $13,554,163 in goodwill and $8,261,000 in acquired in-process research and development (IPR&D), with the fair value of equity determined by the closing price of TuHURA's common stock[59][62] - Approximately $3,900,000 in initial transaction costs for the Kineta merger were recorded under general and administrative expenses[63] Note 5—Net loss per share Analyzes the net loss per share for the three and six months ended June 30, 2025 and 2024, considering the impact of increased weighted-average shares outstanding Net Loss Per Share Attributable to Common Stockholders | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common stockholders | $(9,525,924) | $(5,265,235) | $(16,192,384) | $(10,107,377) | | Weighted-average common shares outstanding - basic and diluted | 44,555,095 | 12,178,522 | 44,983,198 | 12,176,127 | | Net loss per share attributable to common shareholders - basic and diluted | $(0.21) | $(0.43) | $(0.36) | $(0.83) | - The net loss per share (basic and diluted) for the three months ended June 30, 2025, was $(0.21), an improvement from $(0.43) in the prior year, despite a larger net loss, due to a significant increase in weighted-average shares outstanding[66] - For the six months ended June 30, 2025, net loss per share was $(0.36), compared to $(0.83) in 2024, also influenced by the increased share count[66] - Potentially dilutive securities, including stock options and warrants, were excluded from diluted EPS calculations as their effect would be anti-dilutive due to the company's net losses[67][68] Note 6—Other current assets Details the composition of other current assets, including tax credits, grant receivables, and clinical trial deposits, as of June 30, 2025, and December 31, 2024 Other Current Assets Breakdown | Asset Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :-------------- | :---------------- | | Employee Retention Tax Credit | $214,699 | $214,699 | | NIH Grant Receivable | $194,670 | $222,702 | | Clinical trial deposit | $204,955 | $204,955 | | Other current assets | $414,764 | $316,352 | | Total Other Current Assets | $1,029,088 | $958,708 | - Total other current assets increased slightly from $958,708 at December 31, 2024, to $1,029,088 at June 30, 2025, primarily due to an increase in 'Other current assets'[69] Note 7—Property and equipment, net Provides a breakdown of property and equipment, net of accumulated depreciation, and highlights changes between December 31, 2024, and June 30, 2025 Property and Equipment, Net | Asset Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Furniture and fixtures | $170,607 | $170,607 | | Leasehold improvements | $544,629 | $544,629 | | Machinery and office equipment | $1,471,417 | $1,423,183 | | Software | $72,394 | $72,394 | | Less accumulated depreciation and amortization | $(2,114,876) | $(2,087,447) | | Total Property and equipment, net | $144,171 | $123,366 | - Net property and equipment increased from $123,366 at December 31, 2024, to $144,171 at June 30, 2025, mainly due to additions in machinery and office equipment[70] - Depreciation and amortization expense for property and equipment was approximately $27,000 for the six months ended June 30, 2025, a decrease from $70,000 in the same period of 2024[70] Note 8—Accounts payable, debt, and accrued expenses Details the composition of current liabilities, including trade accounts payable, accrued compensation, and liabilities assumed from the Kineta merger Accounts Payable and Accrued Expenses | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------------------------- | :-------------- | :---------------- | | Trade accounts payable | $3,646,806 | $3,152,816 | | Accrued compensation | $809,237 | $1,161,650 | | Assumed liabilities from Kineta merger (accounts payable and employee separation costs) | $5,211,727 | $- | | Other accrued expenses | $2,425,393 | $855,700 | | Total Accounts payable and accrued expenses | $12,093,163 | $5,170,166 | - Total accounts payable and accrued expenses more than doubled from $5.17 million at December 31, 2024, to $12.09 million at June 30, 2025, primarily due to $5.21 million in liabilities assumed from the Kineta merger[71] - The company also assumed debt with a fair value of $434,000 from the Kineta merger, which was settled and paid in July 2025[71] Note 9—Income taxes Explains the company's income tax position, including the full valuation allowance on deferred tax assets due to a history of operating losses - The company has provided a full valuation allowance for its deferred tax assets as of June 30, 2025, and December 31, 2024, due to its history of operating losses, indicating that the benefit of these assets is not likely to be realized[73] Note 10—Stockholders' equity Details the company's capital structure, including common and preferred stock outstanding, and the impact of the June 2025 private placement and warrant activity - As of June 30, 2025, the company had 49,913,946 shares of common stock outstanding, out of 200,000,000 authorized shares, and 278,530 shares of Series A Preferred Stock outstanding[75][76] - The June 2025 Private Placement involved the issuance of 4,759,309 common shares and an equal number of warrants for approximately $12.6 million, with $8.9 million received by June 30, 2025, and the remaining $3.7 million expected by December 31, 2025[77] Outstanding Common Stock Warrants as of June 30, 2025 | Warrant Type | Outstanding | Weighted Average Exercise Price | Expiration Dates | | :------------------------------------------ | :---------- | :------------------------------ | :----------------------------- | | Legacy TuHURA common stock warrants | 8,324,808 | $4.52 | October 2025 to August 2029 | | Historical Kintara common stock warrants | 10,199 | $757.65 | June 2025 to April 2027 | | TuHURA Warrants from 2025 Securities Purchase Agreement | 3,363,076 | $3.32 | December 2030 | | TuHURA Warrants issued to placement agent | 134,523 | $3.32 | December 2030 | | 2024 common stock warrants issued to financial advisor | 297,029 | $0.01 | April 2027 | - From January 1, 2025, to June 30, 2025, 1,208,104 warrants were exercised, generating $3,620,657 in proceeds[81] Note 11—Stock option plans Summarizes stock option activity, including grants, exercises, and forfeitures, and details stock-based compensation expense for the six months ended June 30, 2025 Stock Option Activity for Six Months Ended June 30, 2025 | Activity | Number of options | Weighted Average Exercise Price | | :-------------------------- | :---------------- | :------------------------------ | | Outstanding at December 31, 2024 | 6,403,818 | $5.11 | | Forfeited and cancelled | (131,193) | $3.69 | | Exercised | (271,853) | $2.09 | | Granted | 505,298 | $3.39 | | Outstanding at June 30, 2025 | 6,506,070 | $5.13 | | Exercisable at June 30, 2025 | 2,312,493 | $5.99 | - Total stock-based compensation expense for the six months ended June 30, 2025, was $2,831,783, significantly higher than $610,096 in the prior year, allocated to general and administrative ($993,831) and research and development ($1,837,952)[84] - As of June 30, 2025, there was approximately $14,000,000 of unrecognized stock compensation expense to be recognized over the next three years[83] Note 12—Commitments and contingencies Outlines the company's contractual obligations, including future minimum lease payments for facilities and employment agreement commitments for key executives Future Minimum Lease Payments | Year Ending December 31, | Amount | | :------------------------- | :----- | | 2025 (6 months) | $86,823 | | 2026 | $43,411 | | Interest portion of right of use liability | $(5,265) | | Operating lease liabilities | $124,969 | Future Minimum Payments Under Employment Agreements | Year Ending December 31, | Amount | | :------------------------- | :--------- | | 2025 (6 months) | $437,000 | | 2026 | $874,000 | | Total | $1,311,000 | - The company has lease commitments for its facilities expiring in March 2026 and employment agreements with its CEO and CFO totaling $1,311,000 in future minimum payments through 2026[85][87][88] Note 13—Subsequent events Reports on significant events occurring after the reporting period, including consulting agreements with former Kineta employees and a registration statement filing - Subsequent to the Kineta Merger, the company entered into consulting agreements with six former Kineta employees, involving cash payments and approximately 133,000 shares of common stock, and issued notes payable totaling $590,000[90] - On August 12, 2025, the company filed a registration statement on Form S-1 for the resale of common stock and shares underlying warrants issued in the June 2025 Private Placement[91][92] 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 and operational results, highlighting its business overview, recent developments including financing and mergers, detailed analysis of operating expenses, and discussions on liquidity, capital resources, and critical accounting policies Overview Provides a high-level summary of TuHURA Biosciences' business, its focus on immuno-oncology, and its historical and projected operating losses - TuHURA Biosciences, Inc. is a clinical-stage immuno-oncology company focused on developing novel therapeutics to overcome resistance to cancer immunotherapies, with three core technologies: Immune FxTM, TBS-2025, and Delta Opioid Receptor technology[95][96][97][98] - The company has incurred significant operating losses since inception, with net losses of $16.2 million and $10.1 million for the six months ended June 30, 2025 and 2024, respectively, and an accumulated deficit of $127.3 million as of June 30, 2025[100] - The company does not generate product sales revenue and expects operating losses to increase as product candidates advance through clinical development, necessitating substantial additional funding[99][101][102] Recent Developments Highlights key recent corporate activities, including a private placement financing and the completion of the Kineta Merger - In June 2025, the company completed a private placement, issuing 4,759,309 common shares and warrants for approximately $12.6 million, with $8.9 million received by June 30, 2025, tied to specific milestones including FDA clearance and Phase 3 registration trial initiation[105][106][107] - The Kineta Merger closed on June 30, 2025, converting each Kineta common stock share into 0.185298 shares of TuHURA common stock, totaling approximately 2,868,169 shares, with additional shares and potential cash consideration to be issued later[111][112] Components of Our Results of Operations Explains the primary drivers of the company's financial results, focusing on revenue, research and development, general and administrative expenses, and other income/expense items - The company currently generates no revenue from product sales and does not anticipate doing so in the near future[113] - Research and development expenses, recognized as incurred, primarily relate to the development of IFx-2.0, IFx-3.0, manufacturing, clinical studies, and preclinical activities, and are expected to increase substantially[114][115][117] - General and administrative expenses, consisting of salaries, legal, accounting, and public company costs, are also expected to rise to support R&D and potential commercialization activities[119] - Other income (expense) includes interest income, interest expense from convertible notes (now converted), grant income from an NIH-funded research grant, and non-cash changes in the fair value of derivative liabilities[120] Results of Operations Analyzes the company's financial performance by comparing key income statement items for the three and six months ended June 30, 2025, against the prior year Comparisons for the Three Months Ended June 30, 2025, and June 30, 2024 Compares the company's financial performance for the three-month periods ended June 30, 2025, and 2024, highlighting changes in expenses and net loss Three Months Ended June 30: Key Financial Changes | Metric | 2025 | 2024 | Change | | :----------------------------------- | :----------- | :----------- | :----------- | | Research and development expenses | $4,926,936 | $2,823,064 | +$2,103,872 | | General and administrative expenses | $4,949,020 | $795,660 | +$4,153,360 | | Operating Loss | $(9,875,956) | $(3,618,724) | $(6,257,232) | | Grant income | $322,655 | $- | +$322,655 | | Interest expense | $- | $(1,357,458) | +$1,357,458 | | Net loss | $(9,523,835) | $(5,265,235) | $(4,258,600) | - Research and development expenses increased by $2.1 million, driven by ongoing clinical development of IFx-2.0 (+$0.5M), preclinical research of IFx-3.0 and MDSCs (+$0.4M), and higher personnel/facilities costs (+$1.2M)[123][126] - General and administrative expenses surged by $4.1 million, primarily due to increased non-cash stock compensation, Kineta acquisition merger transaction costs, and public company operating expenses[124] - Interest expense decreased to zero in 2025 from $1.4 million in 2024, as convertible notes were converted into common stock upon the Kintara Merger[126][127] Comparisons for the Six Months Ended June 30, 2025, and June 30, 2024 Compares the company's financial performance for the six-month periods ended June 30, 2025, and 2024, detailing changes in expenses, grant income, and net loss Six Months Ended June 30: Key Financial Changes | Metric | 2025 | 2024 | Change | | :----------------------------------- | :----------- | :----------- | :----------- | | Research and development expenses | $9,508,608 | $6,412,077 | +$3,096,531 | | General and administrative expenses | $7,384,371 | $1,812,401 | +$5,571,970 | | Operating Loss | $(16,892,979) | $(8,224,478) | $(8,668,501) | | Grant income | $575,209 | $- | +$575,209 | | Interest expense | $- | $(1,612,580) | +$1,612,580 | | Net loss | $(16,188,206) | $(10,107,377) | $(6,080,829) | - Research and development expenses increased by $3.1 million, primarily due to ongoing clinical development of IFx-2.0 (+$0.3M), preclinical research of IFx-3.0 and MDSCs (+$0.6M), and higher personnel/facilities costs (+$2.2M)[131] - General and administrative expenses rose by $5.6 million, mainly attributable to increased non-cash stock compensation, Kineta acquisition transaction costs, and public company operating expenses[132] - Grant income of $0.6 million was recognized in 2025 from the Kintara Health and Human Services grant, which was not present in 2024[133] Liquidity and Capital Resources Assesses the company's ability to meet its financial obligations, detailing cash position, historical cash burn, and future funding strategies - The company has consistently incurred net losses and negative cash flows from operations, with $11.0 million used in operating activities for the six months ended June 30, 2025, and an accumulated deficit of $127.3 million[137] - As of June 30, 2025, cash and cash equivalents were $8.5 million. The company expects existing capital, including $3.0 million received in July 2025 from the Securities Purchase Agreement, to fund operations through late Q4 2025[138][150] - Future funding requirements are substantial and depend on the progress and costs of drug discovery, clinical trials, regulatory approvals, manufacturing, and public company operations. The company plans to raise capital through equity offerings, debt financings, collaborations, or licensing arrangements[149][151][152] Net Cash Flow Activity (Six Months Ended June 30) | Activity | 2025 | 2024 | | :----------------------- | :------------- | :------------- | | Operating activities | $(10,986,584) | $(8,900,053) | | Investing activities | $(1,307,511) | $(36,498) | | Financing activities | $8,149,741 | $17,582,805 | | Net change in cash | $(4,144,354) | $8,646,254 | Critical Accounting Policies and Significant Judgments and Estimates Discusses key accounting policies requiring significant management judgment and estimation, such as accrued R&D, stock-based compensation, and business acquisition valuations - The preparation of financial statements requires management to make estimates and assumptions, particularly for accrued research and development expenses, stock-based compensation, and common stock valuations[153] - Accrued R&D expenses are estimated based on services performed by vendors, with adjustments made if actual timing or effort varies from estimates[154][155][156] - Stock-based compensation expense is determined using the Black-Scholes option pricing model, which relies on subjective assumptions like expected volatility and term. Common stock valuations, especially before the reverse merger, involved considering equity financing rounds and comparable public companies[158][159][160] - The Kineta acquisition involved significant judgment in valuing acquired in-process research and development (IPR&D) as indefinite-lived intangible assets, which are subject to impairment testing[162][164][166][167] Recently Issued and Adopted Accounting Pronouncements Refers to Note 2 for details on new accounting pronouncements and their potential impact on the company's financial reporting - A description of recently issued and adopted accounting pronouncements that may potentially impact the company's financial position and results of operations is disclosed in Note 2 to the financial statements[169] Off-Balance Sheet Arrangements Confirms that the company has no off-balance sheet arrangements as defined by SEC rules during the reporting periods - The company does not have any off-balance sheet arrangements as defined under SEC rules during the periods presented[170] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, primarily interest rate risk and inflation risk, and management's assessment of their impact on operations - The company is exposed to interest rate risk through its cash and cash equivalents, which are held in readily-available checking accounts and potentially short-term money market funds, though historical fluctuations in interest income have not been significant[171][172] - The company maintains deposits in accredited financial institutions, with uninsured portions of cash balances, but believes it is not exposed to unusual credit risk[171] - Inflation risk primarily affects labor and research and development contract costs, but management does not believe it has had a material effect on results of operations during the periods presented[173] Item 4. Controls and Procedures This section details the company's evaluation of its disclosure controls and procedures and internal control over financial reporting, concluding on their effectiveness as of June 30, 2025 - Management, with the participation of the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level[175] - Management also assessed the effectiveness of internal control over financial reporting as of June 30, 2025, based on the COSO framework, and concluded it was effective[176] - There were no material changes in internal control over financial reporting during the most recently completed fiscal quarter[178] PART II. OTHER INFORMATION Contains non-financial disclosures, including legal proceedings, risk factors, equity sales, and exhibits, providing additional context to the financial statements Item 1. Legal Proceedings This section confirms the absence of any material legal proceedings involving the company as of the report date - As of the date of this quarterly report, the company is not a party to any material legal matters or claims[180] Item 1A. Risk Factors This section updates the risk factors previously disclosed, focusing on new risks related to the Kineta Merger, including potential stock price decline and significant integration costs - New risk factors primarily relate to the Kineta Merger, including the potential for the market price of common stock to decline due to sales by former Kineta stockholders or current stockholders[182][183] - The company expects to incur significant non-recurring costs associated with combining operations and transaction fees related to the Kineta Merger, as well as integration costs for processes, policies, and systems[184][185] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on the unregistered sales of equity securities, specifically detailing the June 2025 private placement - On June 2, 2025, the company entered into a securities purchase agreement for a private placement, issuing 4,759,309 shares of common stock and an equal number of warrants for approximately $12.6 million[186] - The combined effective offering price for each share and accompanying warrant was $2.65, and the securities were offered under the exemption provided in Section 4(a)(2) and/or Rule 506(b) of the Securities Act[186] Item 3. Defaults Upon Senior Securities This section states that there have been no defaults upon senior securities - There were no defaults upon senior securities during the reported period[187] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[188] Item 5. Other Information This section confirms that there are no other material information or director and officer trading arrangements to disclose - No directors or officers adopted or terminated a Rule 10b5-1 trading plan or arrangement, or a non-Rule 10b5-1 trading plan or arrangement, during the six months ended June 30, 2025[191] Item 6. Exhibits This section provides a comprehensive list of exhibits filed with the Form 10-Q, including merger agreements, articles of incorporation, bylaws, various warrant forms, and certifications - The exhibits include key legal and corporate documents such as the Agreement and Plan of Merger for the Kineta acquisition, Articles of Incorporation, Amended and Restated Bylaws, and various forms of common stock purchase warrants[193] - Certifications from the Principal Executive Officer and Principal Financial Officer, pursuant to the Sarbanes-Oxley Act of 2002, are filed as Exhibits 31.1, 31.2, 32.1, and 32.2[194] SIGNATURES Confirms the official signing of the report by the Principal Executive Officer and Principal Financial Officer, attesting to its accuracy and compliance - The report is duly signed on August 14, 2025, by James A. Bianco, M.D., President and Chief Executive Officer (Principal Executive Officer), and Dan Dearborn, Chief Financial Officer (Principal Financial Officer), pursuant to the requirements of the Securities Exchange Act of 1934[199][201]