[10-Q] Connect Biopharma Holdings Limited American Quarterly Earnings Report

Rhea-AI Filing Summary

Connect Biopharma (CNTB) reported a swing to loss as the company recorded a $23.2 million net loss for the six months ended June 30, 2025, compared with net income of $6.2 million in the prior-year period. Revenue from the Simcere license fell sharply to $48,000 in both the three- and six-month periods from $24.1 million a year earlier, driven by prior upfront and milestone recognition in 2024. Rademikibart progress remains central: the company presented clinical and preclinical data showing rapid FEV1 improvement and reduced exacerbations and reports that its China collaborator submitted an NDA for atopic dermatitis; Connect is eligible for up to $110 million in remaining milestones plus royalties.

Liquidity tightened: cash, cash equivalents and short-term investments totaled $71.8 million at quarter end and management states this is sufficient to meet anticipated cash requirements for at least one year from the filing. Operating cash use increased to $22.6 million for the six months, reflecting higher R&D as Phase 2 acute‑exacerbation trials were initiated and ongoing program investment continued.

Positive

• Simcere submitted a New Drug Application in China for rademikibart for atopic dermatitis, advancing potential regulatory milestones and commercialization in Greater China.
• Remaining milestone and royalty upside of approximately $110 million under the Simcere License Agreement, plus tiered royalties on net sales in the territory.
• Clinical and preclinical data presented showing rapid FEV1 improvement and reduced acute exacerbations, supporting ongoing Phase 2 acute‑exacerbation trials.
• Cash, cash equivalents and short‑term investments of $71.8 million as of June 30, 2025, which management believes is sufficient for at least one year from filing.
• Planned corporate simplification: termination of the ADR program and a substitution listing to trade ordinary shares directly on Nasdaq under the existing symbol.

Negative

• License and collaboration revenue collapsed to $48,000 for the three and six months ended June 30, 2025 from $24.1 million in the comparable 2024 periods due to prior upfront/milestone recognition in 2024.
• Net loss widened to $23.171 million for the six months ended June 30, 2025, versus net income of $6.154 million in the prior‑year period.
• Cash decline and increased burn: cash and cash equivalents declined from $78.2 million at year‑end to $40.6 million at June 30, 2025, and operating cash used was $22.6 million for the six months.
• One time‑based milestone of ≈$8 million lapsed in 2025 because it was not achieved by the contractual deadline, reducing near‑term contingent consideration.

Insights

Financial Analyst

TL;DR: Mixed financial picture: strong program milestones and China NDA offset by steep revenue decline and rising cash burn.

The financials show a material shift from 2024 driven by license revenue timing: the prior-year period included a large upfront and milestone recognition totaling $24.1 million, whereas 2025 recognized only $48,000 related to cost reimbursements. As a result, the company reported a six‑month net loss of $23.2 million and operating cash outflow of $22.6 million. Cash and short‑term investments of $71.8 million provide a disclosed runway of at least one year under management's plan, but the increased R&D spend and recent initiation of Phase 2 acute‑exacerbation trials imply continued near‑term cash use. Investors should view recent clinical progress and the collaborator NDA as value drivers, while revenue timing and cash burn are the primary near‑term financial considerations.

Biotech Industry Specialist

TL;DR: Clinical and regulatory advances for rademikibart are material, but commercial timing and milestone realization remain uncertain.

Connect reported supportive clinical and preclinical data for rademikibart including rapid FEV1 improvement and reduced exacerbations, and its China partner submitted an NDA for atopic dermatitis, which can unlock regulatory and commercial milestones. Under the Simcere license, remaining milestone potential is ~$110 million plus tiered royalties; however, one time‑based milestone (~$8 million) has lapsed, illustrating milestone timing risk. The company continues to fund Phase 2 acute‑exacerbation studies with topline data expected in the first half of 2026, which will be a key program inflection point for the molecule’s global value proposition.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________

FORM 10-Q

_______________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ________

Commission File Number: 001-40212

_______________________

Connect Biopharma Holdings Limited

(Exact name of registrant as specified in its charter)

_______________________

Cayman Islands			Not Applicable
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
3580 Carmel Mountain Road, Suite 200
San Diego, California			92130
(Address of Principal Executive Offices)			(Zip Code)

(Registrant’s Telephone Number, Including Area Code): (877) 245-2787

_______________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

American Depositary Shares, each representing one Ordinary Share, par value $0.000174 per Share

CNTB

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

o

Accelerated filer

o

Non-accelerated filer

x

Smaller reporting company

x

Emerging growth company

x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).            Yes o     No x

As of July 31, 2025, there were 55,721,657 ordinary shares of the Company ($0.000174 par value) outstanding.

TABLE OF CONTENTS

CONNECT BIOPHARMA HOLDINGS LIMITED

FORM 10-Q FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025

TABLE OF CONTENTS

PART I.

FINANCIAL INFORMATION

Page

ITEM 1.

Condensed Consolidated Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 (unaudited)

4

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)

5

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)

6

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited)

8

Notes to Unaudited Condensed Consolidated Financial Statements

9

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

24

ITEM 4.

Controls and Procedures

24

PART II.

OTHER INFORMATION

ITEM 1.

Legal Proceedings

25

ITEM 1A.

Risk Factors

25

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

25

ITEM 3.

Defaults Upon Senior Securities

25

ITEM 4.

Mine Safety Disclosures

25

ITEM 5.

Other Information

25

ITEM 6.

Exhibits

26

SIGNATURES

27

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EXPLANATORY NOTE

Connect Biopharma Holdings Limited (the “Company”), an exempted company incorporated under the laws of the Cayman Islands, qualifies as a “foreign private issuer,” as defined in Rule 3b-4 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) in the United States (the “U.S.”). The Company has voluntarily elected to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the U.S. Securities and Exchange Commission instead of filing on the reporting forms available to foreign private issuers.

Although the Company has voluntarily elected to file annual, periodic and current reports on U.S. domestic issuer forms, the Company intends to maintain its status as a foreign private issuer. Accordingly, as a foreign private issuer, the Company remains exempt from the U.S. federal proxy rules pursuant to Section 14 of the Exchange Act and Regulations 14A and 14C thereunder, Regulation FD, and its officers, directors, and principal shareholders are not subject to the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

3

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PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

CONNECT BIOPHARMA HOLDINGS LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except par value)

			June 30, 2025						December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents			$	40,632					$	78,232
Short-term investments			31,136						15,476
Accounts receivable, net			—						789
Prepaid expenses and other current assets			5,988						2,464
Total current assets			77,756						96,961
Property and equipment, net			4,051						4,048
Right-of-use lease assets, net			825						189
Intangible assets, net			48						53
Other assets			45						33
Total assets			$	82,725					$	101,284
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable			$	2,294					$	342
Accrued liabilities			7,933						7,802
Contract liabilities			164						164
Current lease liabilities			350						154
Total current liabilities			10,741						8,462
Non-current lease liabilities			520						24
Other non-current liabilities			122						632
Total liabilities			11,383						9,118
Commitments and contingencies (see Note 6)
Shareholders' equity:
Ordinary shares, $0.000174 par value; 400,000 shares authorized; 55,580 shares issued and outstanding at June 30, 2025 and 55,349 shares issued and outstanding at December 31, 2024			10						10
Additional paid-in capital			441,413						439,357
Accumulated other comprehensive loss			(1,375)						(1,666)
Treasury shares			(180)						(180)
Accumulated deficit			(368,526)						(345,355)
Total shareholders' equity			71,342						92,166
Total liabilities and shareholders' equity			$	82,725					$	101,284

See accompanying notes.

4

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CONNECT BIOPHARMA HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands, except per share amounts)

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
License and collaboration revenue			$	48					$	24,116					$	48					$	24,116
Operating expenses:
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
Other income, net:
Interest income			619						1,222						1,339						2,469
Other income (expense)			(39)						9						470						2,732
Total other income, net			580						1,231						1,809						5,201
Net (loss) income before income tax			(12,844)						14,877						(23,062)						6,214
Income tax expense			55						30						109						60
Net (loss) income			$	(12,899)					$	14,847					$	(23,171)					$	6,154
Other comprehensive (loss) income:
Foreign currency translation adjustments			236						79						298						(155)
Unrealized (losses) gains on available-for-sale investments			(6)						2						(7)						11
Comprehensive (loss) income			$	(12,669)					$	14,928					$	(22,880)					$	6,010
Net (loss) income per ordinary share:
Basic			$	(0.23)					$	0.27					$	(0.42)					$	0.11
Diluted			$	(0.23)					$	0.27					$	(0.42)					$	0.11
Weighted-average ordinary shares outstanding:
Basic			55,498						55,186						55,426						55,145
Diluted			55,498						55,710						55,426						55,549

See accompanying notes.

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CONNECT BIOPHARMA HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(in thousands)

			Ordinary Shares						Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Treasury			Accumulated Deficit			Total Shareholders' Equity
			Shares			Amount									Shares
Balance, December 31, 2024			55,349			$	10		$	439,357		$	(1,666)		$	(180)		$	(345,355)		$	92,166
Issuance of ordinary shares upon exercise of stock options			3			—			2			—			—			—			2
Share-based compensation expense			—			—			942			—			—			—			942
Net loss			—			—			—			—			—			(10,272)			(10,272)
Net unrealized losses on available-for-sale investments			—			—			—			(1)			—			—			(1)
Foreign currency translation adjustments			—			—			—			62			—			—			62
Balance, March 31, 2025			55,352			10			440,301			(1,605)			(180)			(355,627)			82,899
Issuance of ordinary shares under ESPP			204			—			143			—			—			—			143
Issuance of ordinary shares upon exercise of stock options			24			—			18			—			—			—			18
Share-based compensation expense			—			—			951			—			—			—			951
Net loss			—			—			—			—			—			(12,899)			(12,899)
Net unrealized losses on available-for-sale investments			—			—			—			(6)			—			—			(6)
Foreign currency translation adjustments			—			—			—			236			—			—			236
Balance, June 30, 2025			55,580			$	10		$	441,413		$	(1,375)		$	(180)		$	(368,526)		$	71,342

See accompanying notes.

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CONNECT BIOPHARMA HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(in thousands)

			Ordinary Shares						Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Treasury			Accumulated Deficit			Total Shareholders' Equity
			Shares			Amount									Shares
Balance, December 31, 2023			55,103			$	10		$	432,402		$	(1,008)		$	(180)		$	(329,727)		$	101,497
Share-based compensation expense			—			—			1,316			—			—			—			1,316
Net loss			—			—			—			—			—			(8,693)			(8,693)
Net unrealized gains on available-for-sale investments			—			—			—			9			—			—			9
Foreign currency translation adjustments			—			—			—			(234)			—			—			(234)
Balance, March 31, 2024			55,103			10			433,718			(1,233)			(180)			(338,420)			93,895
Issuance of ordinary shares under ESPP			27			—			20			—			—			—			20
Issuance of ordinary shares upon exercise of stock options			124			—			101			—			—			—			101
Share-based compensation expense			—			—			1,989			—			—			—			1,989
Net income			—			—			—			—			—			14,847			14,847
Net unrealized gains on available-for-sale investments			—			—			—			2			—			—			2
Foreign currency translation adjustments			—			—			—			79			—			—			79
Balance, June 30, 2024			55,254			$	10		$	435,828		$	(1,152)		$	(180)		$	(323,573)		$	110,933

See accompanying notes.

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CONNECT BIOPHARMA HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

			Six Months Ended June 30,
			2025						2024
Operating activities:
Net (loss) income			$	(23,171)					$	6,154
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Share-based compensation expense			1,893						3,305
Depreciation and amortization			344						326
Accretion of discounts on available-for-sale investments			(537)						(99)
Loss on disposal of property and equipment			34						—
Change in operating assets and liabilities:
Accounts receivable, net			789						—
Prepaid expenses and other assets			(3,524)						1,251
Contract assets			—						(3,930)
Other non-current assets			(7)						(67)
Accounts payable			1,952						(1,679)
Accrued liabilities			131						(579)
Contract liabilities			—						(12,951)
Operating lease liabilities			56						(6)
Other non-current liabilities			(510)						(11)
Net cash used in operating activities			(22,550)						(8,286)
Investing activities:
Purchases of short-term investments			(30,470)						—
Proceeds from maturities and sales of short-term investments			15,340						12,750
Purchases of property and equipment			(384)						(290)
Proceeds from sale of property and equipment			2						—
Net cash (used in) provided by investing activities			(15,512)						12,460
Financing activities:
Proceeds from purchases under the ESPP			143						20
Proceeds from exercise of stock options			20						101
Net cash provided by financing activities			163						121
Effect of exchange rate changes on cash and cash equivalents			299						(119)
Net (decrease) increase in cash and cash equivalents			(37,600)						4,176
Cash and cash equivalents at beginning of year			78,232						105,663
Cash and cash equivalents at end of year			$	40,632					$	109,839
Supplemental disclosure of cash flow information:
Income taxes paid			$	124					$	—

See accompanying notes.

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CONNECT BIOPHARMA HOLDINGS LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Business

Connect Biopharma Holdings Limited (“Connect,” “Connect Biopharma,” the “Company,” “we,” “us,” “our” and similar terms refer to Connect Biopharma Holdings Limited, together with its subsidiaries), headquartered in San Diego, California, is a clinical-stage biopharmaceutical company dedicated to transforming care for asthma and chronic obstructive pulmonary disease (“COPD”). The Company is advancing rademikibart, a next-generation, potentially best-in-class antibody designed to target anti-interleukin-4-receptor alpha (“IL-4Rα”).

Connect Biopharma was incorporated in November 2015 in the Cayman Islands as an exempted company with limited liability. The Company completed its Initial Public Offering (“IPO”) in March 2021 and its American Depositary Shares (“ADSs”) have been listed on the Nasdaq Global Market (“Nasdaq”) since then. Each ADS represents one ordinary share, par value U.S. Dollar $0.000174 per share (“Ordinary Shares”), and which are evidenced by American Depositary Receipts (the “ADRs”). On July 21, 2025, the Company issued a press release announcing its plans to terminate its ADR program, which is expected to occur on or about September 2, 2025. At such time, the Company’s ADRs will be mandatorily cancelled and exchanged for Ordinary Shares at a one-for-one ratio. Concurrently, the Company plans to list its Ordinary Shares directly on Nasdaq in substitution for its ADSs (the “Substitution Listing”). Upon the effectiveness of the Substitution Listing, the Company’s ADSs will cease to be listed on Nasdaq and the Ordinary Shares represented by the ADRs will commence trading on Nasdaq under the Company’s existing symbol “CNTB”.

As of June 30, 2025, we had cash, cash equivalents, and short-term investments of $71.8 million. Based on our current operating plan and projections, management believes that the Company’s cash, cash equivalents and short-term investments will be sufficient to meet the Company’s anticipated cash requirements for a period of at least one year from the date this Quarterly Report on Form 10-Q is filed with the U.S. Securities and Exchange Commission (the “SEC”).

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The Company continues to qualify as a Foreign Private Issuer under SEC rules; however, the Company has voluntarily elected to become a domestic filer, beginning with its Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 31, 2025 (the “2024 Annual Report”). The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial information and the applicable rules and regulations of the SEC for interim reporting. Accordingly, since they are interim statements, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for other quarters or the year ending December 31, 2025. The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited financial statements as of that date. These unaudited condensed consolidated financial statements and the notes thereto should be read in conjunction with the audited financial statements included in our 2024 Annual Report.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its direct and indirect subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The following are the Company’s subsidiaries:

Directly Held

•Connect Biopharma HongKong Limited (“Connect HK”)

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Indirectly Held

•Connect Biopharm LLC

•Connect Biopharma Australia PTY LTD

•Suzhou Connect Biopharma Co., Ltd. (“Connect SZ”)

•Connect Biopharma (Beijing) Co., Ltd

•Connect Biopharma (Shanghai) Co., Ltd.

•Connect Biopharma (Shenzhen) Co., Ltd

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the financial statements. Our significant accounting policies that involve significant judgment and estimates include revenue recognition, investments, accrued research and development expenses, income taxes and share-based compensation. Actual results could differ materially from those estimates.

Fair Value of Financial Instruments

A company may elect to use fair value to measure financial instruments. If the use of fair value is elected, any upfront costs and fees related to the item such as debt issuance costs must be recognized in earnings and cannot be deferred. The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. Unrealized gains and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings and any changes in fair value are recognized in earnings. We have elected to not apply the fair value option to our financial assets and liabilities.

Cash and cash equivalents, receivables, prepaid expenses, other assets, accounts payable and accrued expenses, are carried at cost, which is considered to be representative of their respective fair values because of the short-term maturity of these instruments. Available-for-sale investment securities are carried at fair value.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements & Disclosures, establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

•Level 1—Observable inputs such as quoted prices in active markets for identical assets or liabilities.

•Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Accounts Receivable, Net

Accounts receivable are recorded at the invoice amount, net of an allowance for credit losses. The allowance for credit losses reflects accounts receivable balances that are believed to be uncollectible. In estimating the allowance for credit losses, we consider: (1) our historical experience with collections and write-offs; (2) the credit quality of our customers and any recent or anticipated changes thereto; (3) the outstanding balances and past due amounts from our customers; and (4) reasonable and supportable forecast of economic conditions expected to exist throughout the contractual term of the receivable.

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As of June 30, 2025 and December 31, 2024, we determined that an allowance for credit losses was not required. For the three and six months ended June 30, 2025 and 2024, we did not have any material write-offs of accounts receivable balances.

Share-Based Compensation Expense

On January 1, 2025, we began using the Black-Scholes option pricing model to estimate the fair value of each option grant on the grant date, in order to better align with our peers. Prior to 2025, we estimated the fair value of each option grant on the grant date using the Binomial option pricing model. This fair value is then amortized using the straight-line single-option method of attributing the value of share-based compensation to expense over the requisite service periods of the awards. Forfeitures are accounted for, as incurred, as a reversal of share-based compensation expense related to awards that will not vest. The fair value of each employee share purchase right is estimated on the grant date using the Black-Scholes option pricing model. The estimated fair value of each purchase right is then expensed on a straight-line basis over the requisite service period, which is generally the purchase period. The Black-Scholes option pricing model requires inputs of subjective assumptions, including each option’s expected life and price volatility of the underlying shares.

Net Income (Loss) per Share

Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of ordinary shares outstanding for the period. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of ordinary shares and ordinary share equivalents outstanding for the period determined using the treasury share method. For purposes of this calculation, stock options and employee share purchase rights are considered to be ordinary share equivalents and are included in the calculation of diluted net income (loss) per share only when their effect is dilutive.

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Weighted average ordinary shares outstanding:
Basic			55,498						55,186						55,426						55,145
Effect of potentially dilutive ordinary shares from:
Stock options			—						507						—						387
Employee stock plan purchase rights			—						17						—						17
Diluted			55,498						55,710						55,426						55,549

Because we incurred a net loss for the three and six months ended June 30, 2025, the following ordinary share equivalents were not included in the computation of net loss per share because their effect would be anti-dilutive (in thousands):

			June 30, 2025
Stock options outstanding			13,898
Employee stock purchase plan rights			745
			14,643

Significant Accounting Policies

A complete description of our significant accounting policies are disclosed in the 2024 Annual Report.

Recent Accounting Pronouncements

Adopted

In December 2023, FASB issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), to enhance income tax reporting disclosures and require disclosure of specific categories in the tabular rate reconciliation. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. On January 1, 2025, we adopted the provisions of ASU 2023-09 on a prospective basis and the required disclosures will be included in our Annual Report on Form 10-K for the year ending December 31, 2025. The

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Company does not expect the adoption of ASU 2023-09 to have a material impact on its annual disclosures. ASU 2023-09 did not have an impact on our disclosures included in this Quarterly Report on Form 10-Q.

Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The prescribed categories include purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion. ASU 2024-03 may be applied either prospectively or retrospectively and is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact on our disclosures.

3. Fair Value Measurements

The Company measures cash, cash equivalents and short-term investments at fair value on a recurring basis. The fair values of such assets were as follows (in thousands):

			Fair Value Measurements at Reporting Date Using
			Balance at June 30, 2025			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (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		$	—

			Fair Value Measurements at Reporting Date Using
			Balance at December 31, 2024			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Money market funds			$	43,090		$	43,090		$	—		$	—
U.S. treasury bills			5,936			5,936			—			—
U.S. government agency obligations			8,325			—			8,325			—
U.S. corporate debt securities			1,387			—			1,387			—
U.S. commercial paper			1,831			—			1,831			—
Foreign commercial paper			980			—			980			—
Total			$	61,549		$	49,026		$	12,523		$	—

We have not transferred any investment securities between the three levels of the fair value hierarchy.

As of June 30, 2025, short-term investments included $31.1 million of available-for-sale securities with contractual maturities of three months to one year. As of December 31, 2024, cash equivalents included $3.0 million of available-for-sale securities with contractual maturities of three months or less and short-term investments included $15.5 million of available-for-sale securities with contractual maturities of three months to one year. The money market funds as of June 30, 2025 and December 31, 2024 are included in cash and cash equivalents on the unaudited condensed consolidated balance sheets.

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The Company’s cash equivalents and short-term investment securities are classified within the fair value hierarchy as defined by authoritative guidance. The Company’s investment securities classified as Level 1 are valued using quoted market prices. The Company obtains the fair value of its Level 2 financial instruments from third-party pricing services. The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable. The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and matrices and obtaining market values from other pricing sources. After completing the validation procedures, the Company did not adjust or override any fair value measurements provided by these pricing services as of June 30, 2025 or December 31, 2024. The Company does not have any investments classified as Level 3.

4. Balance Sheet Details

Available-for-Sale Investments

The following is a summary of our available-for-sale investments (in thousands):

			June 30, 2025
			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

			December 31, 2024
			Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Estimated Fair Value
U.S. treasury bills			$	5,934		$	2		$	—		$	5,936
U.S. government agency obligations			8,326			—			(1)			8,325
U.S. corporate debt securities			1,387			—			—			1,387
U.S. commercial paper			1,831			—			—			1,831
Foreign commercial paper			980			—			—			980
Total			$	18,458		$	2		$	(1)		$	18,459

At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are the result of credit losses. Impairment is assessed at the individual security level. Factors considered in determining whether a loss resulted from a credit loss or other factors include the Company’s intent and ability to hold the investment until the recovery of its amortized cost basis, the extent to which the fair value is less than the amortized cost basis, the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency, any adverse legal or regulatory events affecting the issuer or issuer’s industry, and any significant deterioration in economic conditions.

The Company does not intend to sell the investment in unrealized loss position and it is unlikely that the Company will be required to sell the investment before the recovery of its amortized cost basis. Based on its evaluation, the Company determined its credit losses related to its available-for-sale securities were immaterial at June 30, 2025 or December 31, 2024.

The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. The Company regularly monitors and evaluates the realizable value of its available-for-sale investment securities. The Company did not recognize any impairment losses for the three and six months ended June 30, 2025 or 2024.

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Unrealized gains and losses associated with the Company’s investments are reported in accumulated other comprehensive loss. For the three and six months ended June 30, 2025, the Company recorded $6,000 and $7,000, respectively, in net unrealized losses associated with its available-for-sale investments. For the three and six months ended June 30, 2024, the Company recorded $2,000 and $11,000, respectively, in net unrealized gains associated with its available-for-sale investments.

Realized gains and losses associated with its investments, if any, are reported in the statements of operations and comprehensive loss. The Company did not recognize any realized gains or losses during the three and six months ended June 30, 2025 or 2024.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

			June 30, 2025						December 31, 2024
Prepaid expenses			$	5,567					$	2,149
Interest receivables			193						262
Other assets			228						53
Total prepaid expenses and other current assets			$	5,988					$	2,464

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

			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 accrued liabilities			$	7,933					$	7,802

5. License and Collaboration Agreement

Simcere License Agreement

On November 21, 2023 (the “Effective Date”), Connect HK and Connect SZ (“Licensor”) entered into an exclusive license and collaboration agreement (the “License Agreement”) with Simcere Pharmaceutical Co., Ltd. (“Simcere” or “Licensee”), a subsidiary of Simcere Pharmaceutical Group Ltd., to develop and commercialize rademikibart in Greater China.

Simcere has been granted exclusive rights to develop, manufacture, and commercialize rademikibart for all indications in Greater China, including mainland China, Hong Kong, Macau, and Taiwan (the “Territory”), while Connect retains rights in all other markets. Under the License Agreement, Connect was required to complete all of rademikibart’s ongoing clinical trials and related analysis in the Territory in atopic dermatitis (“AD”), while the Licensee will be responsible for rademikibart’s new drug application for AD in China and will also conduct and be responsible for the costs of all future clinical studies in all additional disease indications for rademikibart in Greater China.

As consideration for the rights granted to Simcere under the License Agreement, Simcere paid the Licensor a non-refundable, non-creditable up-front fee of approximately $21 million. Simcere is also required to make milestone payments to the Licensor upon the achievement of certain development, regulatory and commercial milestones (“Milestones”), initially totaling up to $123 million. In 2024, we received approximately $5 million in Milestone payments from Simcere for the achievement of certain development Milestones. In 2025, one time-based Milestone in the amount of approximately $8 million lapsed because it was not achieved by the deadline set forth in the License Agreement. Accordingly, as of June 30, 2025, we are eligible to receive remaining Milestone payments up to an aggregate amount of approximately $110 million. The achievement of these Milestones is dependent upon the timing and success of future development, regulatory and commercial activities to be completed by Simcere. Simcere is also required to make payments for cost reimbursements related to certain development activities, including supply of material for clinical development. The License Agreement additionally provides that Simcere is obligated to pay Licensor royalties at tiered percentage rates up to low double-digit percentages on net sales of the licensed product in the Territory.

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The term of the License Agreement is coterminous with the period up to which sales-based royalty payments shall be made, which is approximately 12 years after commercialization of the licensed compound. After this period, the license is considered fully paid and Simcere can continue to exploit the rights in the license in the Territory.

Revenue Recognition

The Company evaluated the License Agreement which provides Simcere with the right to use the Company’s intellectual property in the Territory. The Company concluded that the License Agreement was subject to Topic 606 because the Company viewed the License Agreement as a contract with a customer as the activities were central to its business operations. As such, the Company assessed the terms of the License Agreement and identified four performance obligations for the license to research, develop, manufacture and commercialize rademikibart in the Territory. The four performance obligations identified include: (i) transfer of the intellectual property and know-how; (ii) transfer of the current manufacturing process; (iii) development and transfer of a new manufacturing process; and (iv) completion of certain rademikibart development services.

At inception of each arrangement that includes milestone payments, the Company evaluates where the milestones are considered probable of being reached. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. At the Effective Date, the Company determined the transaction price to be $25 million, which is comprised of (i) a $21 million upfront payment for the grant of license to the Licensee and (ii) $4 million of cost reimbursement upon delivery of certain clinical trial reports. All other milestones are considered to be constrained at the Effective Date because these milestones are not within the control of the Company and therefore these milestones are not included in the transaction price.

When an intellectual property license is determined to be a predominant promise in the arrangement, sales-based milestone payments and royalties are recognized at the later of when the associated performance obligation has been satisfied or when the sales occur. For cost reimbursements related to the supply of material for clinical development, the Company recognizes revenue when Simcere obtains control of the goods. For the three and six months ended June 30, 2025, the Company recognized $48,000 in revenue under the License Agreement related to cost reimbursements for clinical materials. For the three and six months ended June 30, 2024, the Company recognized $24.1 million in revenue under the License Agreement, which related to the upfront license fee and achievement of certain development milestones.

Allocation of the Transaction Price

The transaction price is generally allocated to the identified performance obligations based on the relative stand-alone selling price estimated for each distinct performance obligation. However the Company has allocated certain regulatory and development milestone payments only to certain specific performance obligation(s) where the terms of such payments relate specifically to the Company’s efforts to satisfy the respective performance obligation, and provided that such allocation is consistent with the objective that transaction price is allocated to each performance obligation in order to reflect the consideration to which the Company expects to be entitled to receive in exchange for satisfying those performance obligations. The Company allocated the $25.0 million transaction price based on relative stand-alone selling prices of each performance obligation as $23.8 million for the license, $0.1 million for the transfer of the current manufacturing process, $0.2 million for development and transfer of a new manufacturing process, and $0.9 million for completion of certain rademikibart development services. The Company developed the estimated stand-alone selling price for the license using a discounted cash flows model, which is an income approach. In estimating the stand-alone selling price for each performance obligation, the Company developed assumptions that require judgment and included forecasted revenues, expected development timelines, discount rates, probabilities of technical and regulatory success and costs for manufacturing clinical supplies.

The Company utilizes judgment to assess when control of the goods and services transfers to Simcere, to determine whether the performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. When recognizing revenue over time, the Company evaluates the measure of progress each reporting period and, if necessary, adjusts the progress of performance and related revenue recognition.

The Company expects to recognize the transaction price, at a point in time or over the expected performance period of each respective performance obligation. The Company began recognizing revenue from the License Agreement once the Company had substantially completed the transfer of the intellectual property and know-how to Simcere. The revenue associated with the transfer of the intellectual property and know-how and transfer of the current manufacturing process were recognized at a point in time upon successful completion of each obligation during the second quarter of 2024. The Company will recognize the revenue associated with the transfer of a new manufacturing process at a point in time upon

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successful completion of the obligation. For the performance obligation to complete certain development services, the Company recognized the transaction price over the expected performance period using an input method. To measure the progress of this obligation, the Company used the cost-to-cost basis approach to estimate the percentage of completion as this method provides the most faithful depiction of the Company’s performance in transferring control of the services promised to Simcere and represents the Company’s best estimate of the period of the obligation. The performance obligation related to certain rademikibart development services was completed in third quarter of 2024.

Milestone Payments

The Licensor is entitled to development milestones under the License Agreement and certain regulatory milestone payments which are paid upon receipt of regulatory approvals within the Territory.

At the end of each reporting period, the Company will re-evaluate the probability of achievement of each milestone and any related constraint, and if necessary, adjust its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect the reported amount of license and collaboration revenues in the period of adjustment.

Royalties

As the license is deemed to be the predominant item to which sales-based royalties relate, the Company will recognize revenue when the related sales occur.

Contract Assets and Liabilities

As of June 30, 2025 and December 31, 2024, the Company had no contract assets related to the License Agreement. As of June 30, 2025 and December 31, 2024, the Company had contract liabilities related to the upfront fee received under the License Agreement of $0.2 million.

6. Commitments and Contingencies

Legal Proceedings

From time to time, the Company may be a party to litigation or subject to claims in the ordinary course of business. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. 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.

7. Leases

In February 2025, we relocated our corporate headquarters to a new location in San Diego, California. This operating lease for the new corporate headquarters is for 6,942 square feet of office space which expires on January 31, 2028. In the first quarter of 2025, we recognized an initial right-of-use (“ROU”) lease asset of $0.9 million and a lease liability of $0.9 million related to this space in San Diego, California.

As of June 30, 2025, we have an operating lease for 25,476 square feet of laboratory and office space in Taicang, China, with a lease term that expires on April 30, 2026. We also had an operating lease for 3,628 square feet of office space in San Diego, California, with a lease term that expired on April 30, 2025.

As of June 30, 2025 and December 31, 2024, the weighted average remaining lease term was 2.4 years and 1.0 year, respectively, and the weighted average discount rate used to determine the operating lease liability was 8.0% and 4.8%, respectively.

During the three and six months ended June 30, 2025, we recognized $121,000 and $246,000, respectively, of operating lease expense and we paid $88,000 and $163,000, respectively, for our operating leases.

During the three and six months ended June 30, 2024, we recognized $72,000 and $144,000, respectively, of operating lease expense and we paid $75,000 and $149,000, respectively, for our operating leases.

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Annual future minimum lease payments as of June 30, 2025 are as follows (in thousands):

2025 (remainder of year)			$	211
2026			371
2027			354
2028			30
Thereafter			—
Total future minimum lease payments			966
Less: amount representing interest			(96)
Total lease liabilities			$	870

8. Reorganization

Executive Officer Departures

During the second and third quarters of 2024, we implemented changes to our executive leadership structure. In connection with these changes, we provided three executive officers with one-time severance payments upon termination, continued benefits for a specified period of time, and certain stock option modifications. The total expense for these activities was $3.2 million, $2.0 million of which was primarily for cash severance and $1.2 million of which was for non-cash, share-based compensation expense. During the three and six months ended June 30, 2024, we recognized $1.4 million of the total expense, $0.7 million of which was included in general and administrative expense, and $0.7 million of which was included in research and development expense. The remaining expense of $1.8 million was recognized during the third quarter of 2024. As of June 30, 2025, we have paid the $2.0 million of cash severance charges. We have accounted for these expenses in accordance with the FASB ASC Topic 420, Exit or Disposal Cost Obligation.

9. Shareholders’ Equity

Statutory Reserves

In accordance with the People’s Republic of China (“PRC”) regulations and the articles of association of the companies registered in the PRC, companies are required to set aside 10% of their net profit for the year, offsetting any prior year losses, to the statutory surplus reserve fund as determined under the relevant PRC accounting standards. When the balance of such reserve reaches 50% of the entity’s registered capital, any further appropriation is optional. As of June 30, 2025, we have not made any profit appropriations to the reserve fund, as all of our subsidiaries in the PRC were in an accumulated loss position.

Under PRC laws and regulations, there are restrictions on the Company’s PRC subsidiaries with respect to transferring certain of their net assets to the Company either in the form of dividends, loans, or advances. As of June 30, 2025 and December 31, 2024, restricted net assets including paid-in capital and statutory reserve funds of the Company’s PRC subsidiaries was $28.1 million and $29.6 million, respectively.

10. Equity Incentive Plans

Option Plan Activity

The following table summarizes the stock option activity for the six months ended June 30, 2025:

			Outstanding Options
			Number of Options			Weighted-Average Exercise Price
Outstanding at December 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

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Share-based Compensation

The following table summarizes share-based compensation expense related to share-based payment awards granted pursuant to all of our equity compensation arrangements (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						2024
Research and development			$	253					$	954					$	584					$	1,561
General and administrative			698						1,035						1,309						1,744
Total share-based compensation expense			$	951					$	1,989					$	1,893					$	3,305

As of June 30, 2025, there was $9.0 million of total unrecognized compensation cost related to non-vested, share-based payment awards granted under all of our equity compensation plans. Total unrecognized compensation cost will be adjusted for forfeitures. We expect to recognize this compensation cost over a weighted-average period of 3.0 years.

On January 1, 2025, we began using the Black-Scholes option pricing model to estimate the fair value of each option grant on the grant date, in order to better align with our peers. Prior to 2025, we estimated the fair value of each option grant on the grant date using the Binomial option pricing model. In connection with our change in method of estimating the fair value per share, we also began estimating the expected term of each option grant based on the simplified method described in SEC Staff Accounting Bulletin No. 107, Share-Based Payment. We believe the simplified method is appropriate, as all of our stock option grants would be considered “plain-vanilla” and we have a limited history of option exercise activity.

The following are the weighted-average assumptions for stock options:

			For the Six Months Ended June 30,
			2025						2024
Risk-free interest rate			4.1		%				4.4		%
Dividend yield			0.0		%				0.0		%
Volatility			105.7		%				103.7		%
Expected life (years)			6						10
Early exercise multiple (years)			—						2.2 - 2.8

The weighted-average fair value of options granted was $0.64 and $1.26 for the six months ended June 30, 2025 and 2024, respectively.

We estimate the fair value of each purchase right granted under our Employee Stock Purchase Plan at the beginning of each new offering period using the Black-Scholes option pricing model. The following are the weighted-average assumptions for purchase rights under our ESPP. There was no new offering period during the six months ended June 30, 2024.

			For the Six Months Ended June 30, 2025
Risk-free interest rate			4.1		%
Dividend yield			0.0		%
Volatility			109.0		%
Expected life (months)			6 - 24

11. Income Taxes

For the three and six months ended June 30, 2025, we recorded income tax expense of $55,000 and $109,000, respectively, compared to $30,000 and $60,000, respectively, for the same periods in 2024. Our effective tax rate for the three and six months ended June 30, 2025 was (0.4)% and (0.5)%, respectively, compared to 0.2% and 1.0%, respectively, for the same periods in 2024. The effective tax rate in both periods was primarily driven by the full valuation allowance maintained against the Company’s deferred tax assets.

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For the three and six months ended June 30, 2025, the Company’s provision for income taxes was based on its worldwide estimated annualized effective tax rate, except for (1) jurisdictions for which a loss is expected for the year and no benefit can be realized for those losses, (2) jurisdictions for which forecasted pre-tax income or loss cannot be estimated, and (3) the tax effect of discrete items occurring during the period. The tax for jurisdictions for which a forecast cannot be estimated is based on actual taxes and tax reserves for the quarter.

Under the provisions of ASC 740, Income Taxes, the determination of the Company’s ability to recognize its deferred tax assets requires an assessment of both negative and positive evidence. The Company determined that it was not more likely than not that the Company could recognize its deferred tax assets. The evidence evaluated by the Company included operating results during the most recent three-year period and future projections, with more weight given to historical results than expectations of future profitability, which are inherently uncertain. Certain entities’ net losses in recent periods represented sufficient negative evidence to require a valuation allowance against its net deferred tax assets. This valuation allowance will be evaluated periodically and could be reversed partially or totally if business results sufficiently improve to support realization of deferred tax assets.

As of June 30, 2025, unrecognized tax benefits were $1.4 million, of which none would affect the effective tax rate, if recognized. It is the Company’s policy to classify accrued interest and penalties to unrecognized tax benefits in the provision for income taxes. There were no accrued interest or penalties as of June 30, 2025 or December 31, 2024. The disclosures regarding uncertain tax positions included in our 2024 Annual Report continue to be accurate for the three and six months ended June 30, 2025.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law, introducing significant U.S. tax changes. Key provisions of the OBBBA include changes to bonus depreciation, capitalized research and development expenditures and interest deductibility. The Company does not expect the OBBBA to have a material impact on its effective tax rate or consolidated financial statements.

12. Segment Reporting

The Company operates in one operating segment: treatment of respiratory diseases. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the Chief Operating Decision-Maker (the “CODM”), our Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The CODM utilizes the Company’s consolidated financial forecast, which includes product development roadmaps, as a key input to resource allocation. The CODM makes decisions on resource allocation, assesses performance of the business, and monitors budget versus actual results using our operating expenses, cash burn and cash runway.

The following table provides significant segment expenses, other segment items, reported segment net loss and a reconciliation of segment net loss to the Company’s total consolidated net loss for the three and six months ended June 30, 2025 and 2024 (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						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
Reconciliation of loss (income):
Adjustments and reconciling items			—						—						—						—
Consolidated net (loss) income			$	(12,899)					$	14,847					$	(23,171)					$	6,154

The Company’s long-lived tangible assets, as well as the Company’s ROU lease assets recognized on the Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 were located as follows: $0.9 million and $0.1 million, respectively, in the U.S. and $3.9 million and $4.1 million, respectively, in the PRC.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and related notes included in our 2024 Annual Report.

Forward-Looking Statements

The following discussion and other parts of this quarterly report contain forward-looking statements within the meaning of Section 21E of the Exchange Act. All statements other than statements of historical facts contained in this quarterly report, including statements regarding our strategy, future financial condition, future operations, research and development, potential of, and expectations for, our pipeline and technology platforms, the timing, potential of and expectations for planned clinical trials and preclinical studies, the timing and likelihood of regulatory filings and approvals for our product candidates, our ability to commercialize our product candidates, the potential benefits of collaborations, projected costs, prospects, plans, objectives of management, expected market size and growth for our potential products, the timing of availability of clinical data, program updates and data disclosures, and our plans for rademikibart, are forward-looking statements. These statements are often identified by the use of words such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “might”, “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. The forward-looking statements in this quarterly report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, operating results, business strategy, short-term and long-term business operations and objectives. These forward-looking statements speak only as of the date of this quarterly report and are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A under the heading “Risk Factors.” The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Overview

Connect Biopharma, headquartered in San Diego, California, is a clinical-stage biopharmaceutical company dedicated to transforming care for asthma and COPD. The Company is advancing rademikibart, a next-generation, potentially best-in-class antibody designed to target IL-4Rα.

Significant Developments

The following is a summary of significant developments affecting our business that occurred since the filing of our Quarterly Report on Form 10-Q for the three months ended March 31, 2025, filed with the SEC on May 15, 2025 (“Q1 2025 Form 10-Q”). For additional information or for a more comprehensive discussion of our product candidate, rademikibart, see our 2024 Annual Report and Q1 2025 Form 10-Q.

During the second quarter of 2025, we presented clinical and preclinical data supporting the development of rademikibart at the American Thoracic Society 2025 International Conference and the European Academy of Allergy and Clinical Immunology 2025 Annual Congress. In this data, rademikibart was observed to significantly improve airway function, as measured by forced expiratory volume in one second, within a day and significantly reduce acute exacerbations in patients with inflammation-mediated chronic asthma, which we believe strongly supports ongoing Phase 2 acute exacerbation studies in asthma and COPD. We expect to report topline data for our ongoing Phase 2 acute exacerbation studies in the first half of 2026. In addition, we believe that the preclinical data presented demonstrates rademikibart’s differentiated structural and molecular dynamics, including potentially enhanced IL-4Rα inhibition compared to dupilumab. These findings provide a molecular basis for the distinct efficacy and safety data observed with rademikibart.

In July 2025, we announced that the Company’s collaborator and exclusive licensee in China, Simcere, had submitted its New Drug Application for rademikibart to the National Medical Products Administration of China for the treatment of AD in adults and adolescents. As part of our License Agreement, Connect is eligible to receive remaining milestone payments up to an aggregate amount of approximately $110 million upon the achievement of certain development, regulatory and commercial milestones. We are also eligible to receive royalties at tiered percentage rates up to low double-digit percentages on net sales in Greater China. The AD market in China represents considerable opportunity, with an estimated 70 million patients with AD.

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In July 2025, we announced our plans to terminate the Deposit Agreement dated March 18, 2021, as amended, among the Company, Deutsche Bank Trust Company Americas (the “Depositary”), and the holders and beneficial owners of ADSs evidenced by ADRs issued thereunder (the “Deposit Agreement”). The ADR program and the Deposit Agreement are expected to terminate on or about September 2, 2025. At such time, the Company’s ADRs will be mandatorily cancelled and exchanged for ordinary shares at a one-for-one ratio. Immediately following the termination of the ADR program, we plan to list our ordinary shares on Nasdaq in substitution for our ADSs. Upon the effectiveness of the Substitution Listing, our ADSs will cease to be listed on Nasdaq and the ordinary shares represented by the ADRs will commence trading on Nasdaq under the Company’s existing symbol “CNTB”.

In July 2025, we announced the expansion of the size of our Board of Directors from six to seven directors and the appointment of James A. Schoeneck as a director. Mr. Schoeneck is an accomplished biotech leader with more than 40 years of experience developing and commercializing breakthrough medicines and guiding companies through significant transformation, including both organic and inorganic growth. He currently serves as Chairman of the Board of Directors of each of FibroGen, Inc. and Calidi Biotherapeutics, Inc. Mr. Schoeneck previously served as Chief Executive Officer and a member of the Board of Directors of each of Depomed, Inc., BrainCells Inc., ActivX Biosciences, Inc. and Prometheus Laboratories Inc., and Chairman of the National Board of Directors of the Asthma and Allergy Foundation of America. Mr. Schoeneck began his career at Rhone-Poulenc Rorer Inc. He holds a B.S. from Jacksonville State University.

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. We evaluate our estimates on an ongoing basis, including those related to revenue recognition, investments, accrued research and development expenses, income taxes and share-based compensation. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Our critical accounting estimates and judgments are described within Item 7 of our 2024 Annual Report.

Recent Accounting Pronouncements

See Note 2 to the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2025 and 2024

License and Collaboration Revenues

License and collaboration revenues relate to the Simcere License Agreement under which Simcere has been granted exclusive rights to develop, manufacture, and commercialize rademikibart for all indications in Greater China, including mainland China, Hong Kong, Macau, and Taiwan.

License and collaboration revenues for both the three and six months ended June 30, 2025 were $48,000 for cost reimbursements for clinical materials. License and collaboration revenues for both the three and six months ended June 30, 2024 were $24.1 million for the upfront license fee, achievement of certain development milestones and cost reimbursements.

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Research and Development Expense

Research and development expense consisted of the following (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2025						2024						2025						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 research and development expense			$	8,773					$	5,348					$	15,406					$	14,011

For the three and six months ended June 30, 2025, research and development expense was $8.8 million and $15.4 million, respectively, compared to $5.3 million and $14.0 million, respectively, for the same periods in 2024. The increase in research and development expense was primarily due to an increase in costs related to the development of rademikibart. During the second quarter of 2025, we initiated two rademikibart Phase 2 clinical trials in patients experiencing an acute exacerbation of asthma or COPD.

General and Administrative Expense

For the three months ended June 30, 2025, general and administrative expense was $4.7 million, compared to $5.1 million for the same period in 2024. The decrease in general and administrative expense was primarily due to a decrease in non-cash, share-based compensation expense.

For the six months ended June 30, 2025, general and administrative expense was $9.5 million, compared to $9.1 million for the same period in 2024. The increase in general and administrative expense was primarily due to an increase in professional fees to support our efforts to become more U.S.-centric, as well as an increase in personnel and related costs. These increases were partially offset by a decrease in non-cash, share-based compensation expense.

Other Income, Net

For the three and six months ended June 30, 2025, other income, net was $0.6 million and $1.8 million, respectively, compared to $1.2 million and $5.2 million, respectively, for the same periods in 2024. The decrease in other income, net was primarily due to a decrease in government subsidies and interest income earned on our invested cash balances.

Reorganization

See Note 8 to the Condensed Consolidated Financial Statements included in Item I of this Quarterly Report on Form 10-Q for discussion of the Company’s executive officer reorganization plan.

Liquidity and Capital Resources

As of June 30, 2025, we had cash, cash equivalents and short-term investments of $71.8 million. Based on our current operating plan and projections, management believes that the Company’s existing cash, cash equivalents and short-term investments will be sufficient to meet the Company’s anticipated cash requirements for a period of at least one year from the date this Quarterly Report on Form 10-Q is filed with the SEC.

Our net loss for the three and six months ended June 30, 2025 was $12.9 million, or $0.23 per share, and $23.2 million, or $0.42 per share, respectively, compared to net income of $14.8 million, or $0.27 per share, and $6.2 million, or $0.11 per share, respectively, for the same periods in 2024.

Our net cash used in operating activities for the six months ended June 30, 2025 was $22.6 million, compared to $8.3 million for the same period in 2024. 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 our operating assets and liabilities of $16.9 million.

Our net cash used in investing activities for the six months ended June 30, 2025 was $15.5 million, compared to net cash provided by investing activities of $12.5 million for the same period in 2024. The decrease in cash provided by investing activities was primarily due to net purchases of short-term investments of $15.1 million for the six months ended June 30, 2025, compared to net maturities of $12.8 million for the six months ended June 30, 2024.

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Our net cash provided by financing activities for the six months ended June 30, 2025 was $0.2 million, compared to $0.1 million for the same period in 2024. The increase in net cash provided by financing activities was mainly due to an increase in net proceeds from purchases under the ESPP.

Historically, we have financed our operations, including technology and product research and development, primarily through sales of our ordinary shares and ADSs, including our IPO that we completed in March 2021 for total cash consideration of $219.9 million before underwriting discounts and commissions, and, through up-front payments, research funding and milestone payments under collaborative arrangements.

Material Cash Requirements

In February 2025, we relocated our corporate headquarters to a new location in San Diego, California. This operating lease for the new corporate headquarters is for 6,942 square feet of office space and expires on January 31, 2028. We have agreed to pay a basic annual rent for the additional office space that increases incrementally over the term of the lease from $0.3 million for the first 12 months of the lease (inclusive of certain rent abatements) to $0.4 million for the last 12 months of the lease, and such other amounts as set forth in the lease.

In addition, as of June 30, 2025, we had a lease for 25,476 square feet of laboratory and office space in Taicang, China, with a lease term that expires on April 30, 2026. As of June 30, 2025, we had total operating lease obligations of $1.0 million, with $0.2 million due during the remainder of fiscal year 2025 and $0.8 million due within the following two to three years.

At June 30, 2025, our short-term purchase obligations mainly consisted of non-cancellable commitments under agreements with third-party manufacturers in the ordinary course of business. We plan to fund these commitments with our current financial resources.

We enter into agreements with clinical sites and clinical research organizations for the conduct of our clinical trials and contract manufacturing organizations for the manufacture and supply of preclinical, clinical and, eventually, commercial materials and drug product. We make payments to these clinical sites and clinical research organizations based in part on the number of eligible patients enrolled and the length of their participation in the clinical trials. Under certain of these agreements, we may be subject to penalties in the event that we prematurely terminate these agreements. At this time, due to the variability associated with clinical site agreements, contract research organization agreements and contract manufacturing agreements, we are unable to estimate with certainty the future costs we will incur. We intend to use our current financial resources to fund our obligations under these commitments.

We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development of product candidates and programs, and because the extent to which we may enter into collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future capital requirements will depend on many factors, including:

•our ability to raise capital in light of the impacts of the current unfavorable global economic and political conditions;

•the scope, progress, results, and costs of drug discovery, preclinical development, laboratory testing, and clinical trials for the product candidates we may develop;

•the costs associated with our manufacturing process development and evaluation of third-party manufacturers and suppliers;

•the costs, timing and outcome of regulatory review of our product candidates;

•the costs of preparing and submitting marketing approvals for any of our product candidates that successfully complete clinical trials, and the costs of maintaining marketing authorization and related regulatory compliance for any products for which we obtain marketing approval;

•the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights, and defending intellectual property-related claims;

•the costs of future activities, including product sales, medical affairs, marketing, manufacturing, and distribution, for any product candidates for which we receive marketing approval;

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•the terms of our current and any future license agreements and collaborations;

•the extent to which we acquire or in-license other product candidates, technologies and intellectual property;

•the success of our ongoing or future collaborations;

•our ability to establish and maintain additional collaborations on favorable terms, if at all; and

•the costs of operating as a public company.

Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, monetization transactions, government contracts or other strategic transactions. To the extent that we raise additional capital through the sale of equity, ownership interests of existing holders of our ADSs and ordinary shares will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of our ADSs or ordinary shares. If we raise additional funds through collaboration agreements, strategic alliances, licensing arrangements, monetization transactions, or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves. Future debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt or equity financing that we raise may contain terms that are not favorable to us or our shareholders.

There have been significant disruptions to global financial markets that have contributed to a general global economic slowdown. The resulting high inflation rates may materially affect our business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of our clinical trial materials and supplies, interest rates and overhead costs may adversely affect our operating results. High interest rates also present a recent challenge impacting the U.S. economy and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future. Additionally, the general consensus among economists suggests that we should expect a higher recession risk to continue over the next year, which, together with the foregoing, could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. Furthermore, such economic conditions have produced downward pressure on share prices. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates remain high or begin to rise again) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with geopolitical conflicts such as the ongoing wars involving Ukraine and Israel, the impact of tariffs imposed by or on the U.S. or other matters impacting global trade, shifting priorities and policies within the U.S. federal government, worsening global macroeconomic conditions, and employee availability and wage increases, which may result in additional stress on our working capital resources. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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As of June 30, 2025, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025.

An evaluation was also performed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of any change in our internal control over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. That evaluation did not identify any changes in our internal control over financial reporting that occurred during our latest fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not currently party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have an adverse effect on our business, operating results or financial condition.

Item 1A. Risk Factors.

We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this report, the risks and uncertainties that we believe are most important for you to consider are discussed in Part I, “Item 1A. Risk Factors” in our 2024 Annual Report and Part II, “Item 1A. Risk Factors” in our Q1 2025 Form 10-Q. We are not aware of any material changes to the risk factors described in our 2024 Annual Report and Q1 2025 Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

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Item 6. Exhibits.

Incorporation by Reference

Exhibit No.

Description

Form

File No.

Exhibit Reference

Filing Date

Filed or Furnished Herewith

10.1†

Non-Employee Director Compensation Program

Filed

31.1

Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed

31.2

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed

32.1#

Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Furnished

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Filed

101.SCH

Inline XBRL Taxonomy Extension Schema Document

Filed

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed

101.DEF

Inline XBRL Taxonomy Definition Linkbase Document

Filed

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed

104

Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

Filed

†Management contract or compensatory plan, contract or arrangement.

# The certifications attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						Connect Biopharma Holdings Limited
Date: August 13, 2025						/s/ Barry D. Quart
						Barry D. Quart, Pharm.D.
						Chief Executive Officer
						(Registrant’s Principal Executive Officer)
						/s/ Lisa Peraza
						Lisa Peraza
						Senior Vice President of Finance
						(Registrant’s Principal Financial and Accounting Officer)

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FAQ

What is Connect Biopharma's (CNTB) cash position and runway?

As of June 30, 2025, Connect reported $71.8 million in cash, cash equivalents and short‑term investments and management believes these funds are sufficient to meet anticipated cash requirements for at least one year from the filing of this quarterly report.

How much revenue did CNTB recognize from its Simcere license in Q2 2025?

License and collaboration revenue for both the three‑ and six‑month periods ended June 30, 2025 was $48,000, primarily for cost reimbursements for clinical materials, versus $24.1 million in each comparable 2024 period.

What were CNTB's reported net loss and earnings per share for H1 2025?

Net loss for the six months ended June 30, 2025 was $23.171 million, or $0.42 per ordinary share (basic and diluted).

What is the status of rademikibart's development and potential milestones?

Connect presented clinical/preclinical data showing improved FEV1 and reduced exacerbations, initiated Phase 2 acute‑exacerbation trials, expects topline data in the first half of 2026, and is eligible for up to $110 million in remaining milestone payments plus royalties from Simcere.

Has CNTB made any corporate structure or listing changes?

The company announced plans to terminate its ADR program and effect a substitution listing so ordinary shares will trade directly on Nasdaq under the existing symbol CNTB, with ADSs exchanged one‑for‑one for ordinary shares.