Fractyl Health (GUTS) warns on going concern as cash burn stays high
Fractyl Health, Inc. reported a Q2 2026 net loss of $25.5 million and a six‑month 2026 net loss of $16.3 million, with no product revenue as it remains a clinical‑stage company. Operating expenses were driven by $13.8 million of research and development and $5.3 million of selling, general and administrative costs in the quarter.
For the six months, research and development spending was $29.4 million, down from the prior year period due to lower Revita and Rejuva program costs and reduced headcount. Other income reflected a $24.6 million non‑cash gain from the change in fair value of warrant liabilities, partly offset by losses on notes payable.
Cash and cash equivalents were $47.1 million as of June 30, 2026, with net cash used in operating activities of $38.4 million in the first half. Management expects existing cash to fund operations into early 2027 but concluded there is substantial doubt about the company’s ability to continue as a going concern for at least 12 months from issuance without additional financing or cost reductions.
Clinically, Fractyl reported encouraging weight‑maintenance data from its Revita REMAIN‑1 program and advanced its Rejuva gene therapy platform, including CTA authorization in the Netherlands and ethics approval in Australia for lead candidate RJVA‑001.
Positive
- Research and development expenses fell by 27.5% for the six months ended June 30, 2026, reflecting tighter cost control across Revita and Rejuva programs and contributing to a smaller operating loss.
- Fractyl recorded a $24.6 million non‑cash gain from the change in fair value of warrant liabilities in the first half of 2026, which significantly reduced the reported net loss.
- Cash and cash equivalents of $47.1 million are expected to fund operations into early 2027, carrying the company through several key clinical and regulatory milestones.
- Revita programs reported one‑year data showing participants maintained a large proportion of GLP‑1‑induced weight loss, and Rejuva’s RJVA‑001 received CTA authorization in the Netherlands and ethics approval in Australia, supporting advancement to first‑in‑human studies.
Negative
- Management disclosed substantial doubt about the company’s ability to continue as a going concern for at least one year from issuance, as existing cash will not fund the full operating plan over that period.
- The company received a Nasdaq minimum bid price deficiency notice on March 13, 2026, and must regain compliance by September 9, 2026 to avoid potential delisting of its common stock.
- Net cash used in operating activities was $38.4 million in the first half of 2026, indicating a high cash burn rate relative to the $47.1 million cash balance.
- Total assets declined from $121.4 million at December 31, 2025 to $82.0 million at June 30, 2026, and stockholders’ equity turned negative to a deficit of $1.7 million.
Filing Explained
Existing holders face a higher share count and potential warrant issuance, while the ATM agreement that supplied prior equity funding has ended.
Form 10-Q is an unaudited quarterly report; this filing reports the company’s financial and capital position for the quarter ended
The increase included 4,843,179 shares issued when pre-funded warrants were exercised in January 2026 and 433,740 shares issued under the employee stock purchase plan. For holders who did not receive those shares, the larger total share count reduces percentage ownership absent offsetting changes.
Separately, 21,147,002 Tranche B warrants remained outstanding at June 30, 2026. They were exercisable at $1.05 per share, subject to adjustments, and expire on
The company’s ATM agreement had produced 4,701,960 shares and approximately
A Nasdaq notice gave the company until
Key Figures
Key Terms
De Novo marketing application regulatory
clinical trial application regulatory
going concern financial
at-the-market offering financial
warrant liabilities financial
fair value option financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How much cash does Fractyl Health (GUTS) have and what is its runway?
What was Fractyl Health’s net loss for Q2 and the first half of 2026?
Did Fractyl Health (GUTS) issue a going concern warning in this 10-Q?
What is the status of Fractyl Health’s Revita clinical program as of Q2 2026?
How is Fractyl Health advancing its Rejuva gene therapy platform?
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________________ to ___________________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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.
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).
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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 4, 2026, the number of shares of the registrant’s common stock outstanding was
BASIS OF PRESENTATION
Except where the context otherwise requires or where otherwise indicated, the terms “Fractyl,” “Fractyl Health,” “we,” “us,” “our,” “our company,” “Company” and “our business” refer to Fractyl Health, Inc. and its subsidiaries.
The unaudited condensed consolidated financial statements include the accounts of Fractyl Health, Inc. Our unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Our fiscal year ends on December 31 of each year. Our most recent fiscal year ended on December 31, 2025.
Certain monetary amounts, percentages and other figures included in this Quarterly Report on Form 10-Q have been subject to rounding adjustments. Percentage amounts included in this Quarterly Report on Form 10-Q have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Quarterly Report on Form 10-Q may vary from those obtained by performing the same calculations using the figures in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Certain other amounts that appear in this Quarterly Report on Form 10-Q may not sum due to rounding.
1
TRADEMARKS AND TRADENAMES
This Quarterly Report on Form 10-Q includes our trademarks and trade names, including, without limitation, REVITA, REJUVA and our logo, which are our property and are protected under applicable intellectual property laws. This Quarterly Report on Form 10-Q also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this Quarterly Report on Form 10-Q may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we or the applicable owner will not assert, to the fullest extent permitted under applicable law, our or its rights or the right of any applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.
2
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that can involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, prospective products or product candidates, plans regarding or status of clinical trials or studies and their design, our plans for readouts of interim or final results, product approvals, communications with or submissions to the U.S. Food and Drug Administration (the “FDA”), research and development costs, future revenue, timing and likelihood of success, plans and objectives of management for future operations, future results of anticipated products and prospects, plans and objectives of management, the anticipated use of or impact of the net proceeds from offerings of our securities, and the timing of any of the foregoing are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
3
We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions, described in the Risk Factors in our Annual Report and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. 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 or otherwise.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.
4
Table of Contents
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Page |
PART I |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
6 |
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Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 |
6 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2026 and 2025 |
7 |
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Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2026 and 2025 |
8 |
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Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 |
9 |
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Notes to Condensed Consolidated Financial Statements |
10 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
31 |
Item 4. |
Controls and Procedures |
31 |
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PART II |
OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
32 |
Item 1A. |
Risk Factors |
32 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
32 |
Item 3. |
Defaults Upon Senior Securities |
33 |
Item 4. |
Mine Safety Disclosures |
33 |
Item 5. |
Other Information |
33 |
Item 6. |
Exhibits |
33 |
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Signatures |
34 |
5
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Fractyl Health, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share and per share information)
(Unaudited)
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June 30, |
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December 31, |
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2026 |
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2025 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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Prepaid expenses and other current assets |
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Total current assets |
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Restricted cash, long-term |
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Property and equipment, net |
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Right-of-use lease assets, operating |
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Other long-term assets |
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Total assets |
$ |
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$ |
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Liabilities and stockholders’ equity (deficit) |
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Current liabilities: |
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Accounts payable |
$ |
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$ |
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Accrued expenses and other current liabilities |
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Operating lease liabilities, current |
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Total current liabilities |
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Notes payable, long-term |
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Operating lease liabilities, long-term |
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Warrant liabilities, long-term |
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Other long-term liabilities |
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Total liabilities |
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Stockholders’ equity (deficit): |
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Preferred stock, $ |
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— |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity (deficit) |
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( |
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Total liabilities and stockholders’ equity (deficit) |
$ |
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$ |
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See accompanying notes to condensed consolidated financial statements (unaudited).
6
Fractyl Health, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except for share and per share information)
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Operating expenses: |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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Selling, general and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other income (expense), net: |
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Interest income, net |
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Change in fair value of notes payable |
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( |
) |
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( |
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( |
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( |
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Change in fair value of warrant liabilities |
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( |
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( |
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Other expense, net |
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( |
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( |
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( |
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( |
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Total other income (expense), net |
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( |
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( |
) |
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( |
) |
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Net loss and comprehensive loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Net loss per share, basic and diluted |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Weighted-average number of common shares outstanding, basic and diluted |
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See accompanying notes to condensed consolidated financial statements (unaudited).
7
Fractyl Health, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(in thousands, except for share information)
(Unaudited)
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity (Deficit) |
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Balance at December 31, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Exercise of pre-funded warrants |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Issuance of common stock under employee stock purchase plan |
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— |
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— |
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Net income |
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— |
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— |
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— |
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Balance at March 31, 2026 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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||||
Stock-based compensation expense |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
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Balance at June 30, 2026 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity (Deficit) |
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Balance at December 31, 2024 |
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$ |
— |
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$ |
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$ |
( |
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$ |
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Exercise of common stock options |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at March 31, 2025 |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
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Issuance of common stock in connection with at-the-market offering, net of issuance costs of $ |
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— |
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— |
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Exercise of common stock options |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at June 30, 2025 |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
( |
) |
||
See accompanying notes to condensed consolidated financial statements (unaudited).
8
Fractyl Health, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
|
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Six Months Ended June 30, |
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2026 |
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2025 |
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Operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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Non-cash interest expense |
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Non-cash operating lease expense |
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Stock-based compensation expense |
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Change in fair value of warrant liabilities |
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( |
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( |
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Change in fair value of notes payable, non-cash |
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( |
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( |
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Changes in operating assets and liabilities: |
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Inventory |
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— |
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Prepaid expenses and other current assets |
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( |
) |
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( |
) |
Accounts payable |
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( |
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Accrued expenses and other current liabilities |
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( |
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Operating lease liabilities |
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( |
) |
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( |
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Other long-term assets and liabilities |
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( |
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( |
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Net cash used in operating activities |
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( |
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( |
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Investing activities: |
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Purchases of property and equipment |
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— |
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( |
) |
Net cash used in investing activities |
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— |
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( |
) |
Financing activities: |
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Proceeds from exercise of stock options |
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— |
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Proceeds from exercise of common stock warrants |
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— |
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Proceeds from issuance of common stock under employee stock purchase plan |
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— |
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Issuance of common stock in connection with at-the-market offering, net of issuance costs |
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— |
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Principal payments on finance lease obligations |
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( |
) |
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( |
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Net cash provided by financing activities |
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Net decrease in cash, cash equivalents and restricted cash |
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( |
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( |
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Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Interest paid |
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$ |
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$ |
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Payment for operating leases within operating activities |
|
$ |
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$ |
|
||
See accompanying notes to condensed consolidated financial statements (unaudited).
9
Fractyl Health, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Nature of the Business
Fractyl Health, Inc. (the “Company” or “Fractyl”) was incorporated in Delaware on August 30, 2010 under the name MedCatalyst, Inc. The Company then changed its name to Fractyl Laboratories Inc. on January 10, 2012 and subsequently to Fractyl Health, Inc. on June 9, 2021. The Company is a clinical stage metabolic therapeutics company focused on pioneering novel approaches to treat obesity and type 2 diabetes (“T2D”). The Revita® and Rejuva® candidates are designed to target root causes of metabolic diseases, allowing us to advance metabolic disease treatment from chronic management towards prevention and reversion of the disease.
Revita
The Revita DMR System (“Revita”) is based on the Company’s insights surrounding the potential role of the gut in obesity. Revita is designed to remodel the duodenal lining via hydrothermal ablation (i.e. duodenal mucosal resurfacing) to reverse damage to intestinal nutrient sensing and signaling mechanisms caused by chronic high-fat and high-sugar diets that are a root cause of metabolic disease. In the U.S., Revita is for investigational use only. Revita has U.S. FDA Breakthrough Device designation in weight maintenance for people with obesity who discontinue glucagon-like peptide-1 (“GLP-1”) based drugs. The Company has received favorable FDA feedback on its De Novo classification request for Revita and anticipates submitting a potential De Novo marketing application in the late fourth quarter of 2026. The Company is evaluating Revita in the REMAIN-1 weight maintenance program, which is designed to evaluate Revita’s potential to maintain weight loss following GLP-1 based therapy discontinuation. The REMAIN-1 program includes three distinct patient cohorts that are conducted under a single IDE: the REVEAL-1 Cohort, the REMAIN-1 Midpoint Cohort, and the REMAIN-1 Pivotal Cohort, designed to collectively establish the clinical and regulatory foundation for Revita in weight maintenance.
The REMAIN-1 study was initiated in the third quarter of 2024. The Company completed enrollment of the REMAIN-1 Pivotal Cohort in July 2025, a randomized, double-blind, sham-controlled pivotal study evaluating the safety and efficacy of Revita in maintaining weight loss after GLP-1 based therapy discontinuation. The Company completed randomization of the pivotal cohort in February 2026, with topline six-month data anticipated in the early fourth quarter of 2026. The Company anticipates submitting a potential De Novo marketing application in post-GLP-1 weight maintenance in the late fourth quarter of 2026.
Pursuant to the Company’s strategic reprioritization in January 2025, Fractyl has paused additional investment in the REVITALIZE-1 clinical study of Revita for T2D and the Germany Real-World Registry study. The Company continues to follow existing participants in both studies per protocol and will report clinical, health economic, and patient-relevant outcomes from the Germany Real-World Registry study on an ongoing basis.
Rejuva
The Company is also developing Rejuva, a novel, locally administered, adeno-associated virus delivered pancreatic gene therapy platform. Rejuva is designed to enable long-term remission of T2D and obesity by durably reprogramming pancreatic islet cells to endogenously produce metabolic hormones. Rejuva leverages advanced delivery systems and proprietary screening methods to identify and develop metabolically active gene therapy candidates targeting the pancreas. The lead candidate from the Rejuva platform, RJVA-001, is designed to be delivered to the pancreas via a single endoscopic intervention to enable pancreatic beta cells to express GLP-1 locally via nutrient-responsive control. This gene therapy approach enables physiologic GLP-1 secretion without the high circulating levels that contribute to side effects
10
seen with systemic GLP-1 based drugs. The Company completed key preclinical in vivo studies to support a clinical trial application (“CTA”) for RJVA-001 and subsequently submitted CTAs for RJVA-001 in T2D to regulators in the EU (Netherlands) and Australia in the second half of 2025, advancing the program toward its anticipated first-in-human study. In April 2026, the Company received CTA authorization in the Netherlands for RJVA-001, enabling initiation of the anticipated Phase 1/2 first-in-human study evaluating RJVA-001 in adults with inadequately controlled T2D. Subject to site activation, the Company expects to dose the first patient with RJVA-001 and report preliminary data in the second half of 2026. The Company also plans to conduct the study at sites in Australia. In July 2026, we received ethics committee approval in Australia.
The Company is also developing RJVA-002, a dual GIP/GLP-1 gene therapy, and is currently in preclinical development. RJVA-002 expands the Rejuva platform into obesity, targeting dual incretin biology with the goal of achieving durable, well-tolerated, weight loss from a single intervention.
The Company believes Revita and Rejuva, if approved by relevant regulatory bodies, have the potential to revolutionize treatment across the spectrum of obesity and T2D, align the clinical and economic interest of key stakeholders around the long-term regression of metabolic disease, and, at their fullest potential, significantly reduce the burden of metabolic disease globally.
Nasdaq Minimum Bid Price Notice
On March 13, 2026, the Company received a letter from Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was not in compliance with the minimum bid price requirement of Nasdaq Listing Rule 5450(a)(1) because the closing bid price of the Company’s common stock had been below $
Liquidity
Under ASC 205-40, Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Generally, to be considered probable of being effectively implemented, the plans must have been approved by the Company’s board of directors before the date that the financial statements are issued.
The future success of the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain profitable operations. The Company is subject to a number of risks similar to other early-stage life science companies, including, but not limited to, successful discovery and development of its product candidates, raising additional capital with favorable terms, development by its competitors of new technological innovations, protection of proprietary technology and market acceptance of the Company’s products. The successful discovery and development of product candidates requires substantial working capital which may not be available to the Company on favorable terms or not at all.
The Company has financed its operations to date primarily through its equity and debt financings. The Company has a history of operating losses and had an accumulated deficit of $
11
amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
Management intends to mitigate the conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern entity by (i) negotiating other cash equity, debt or strategic financing, (ii) continuing to pursue the necessary regulatory approvals to launch commercially in the U.S. market, and (iii) executing cost-cutting measures to manage cash burn. However, there can be no assurances that the current plans will generate any liquidity to the Company or be available on terms acceptable to the Company.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared by the Company in accordance with U.S. GAAP for interim financial reporting and as required by Regulation S-X, Rule 10-01. The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. These interim financial statements, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation of the Company’s financial position and results of operations for the three and six months ended June 30, 2026 and 2025. The results of operations for the interim periods are not necessarily indicative of results to be expected for the year ending December 31, 2026, any other interim periods, or any future year or period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2025 and notes thereto, included in the Company’s Annual Report. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements.
Use of Estimates
Leases
The Company has entered into operating leases for office and laboratory spaces and finance leases for certain laboratory equipment, which are accounted for in accordance with ASC 842, Leases, (“ASC 842”).
The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement at inception. Operating leases are included in right-of-use lease assets (“ROU assets”) and current and long-term lease liabilities on the Company’s condensed consolidated balance sheets. Lease expenses for operating leases are recognized on a straight-line basis over the lease term as an operating expense. Assets subject to finance leases are included in property and equipment, net, on the Company’s condensed consolidated balance sheets. Current and long-term portion of the related lease liabilities of the finance leases are included in accrued expenses and other current liabilities and other long-term liabilities, respectively, on the Company’s condensed consolidated balance sheets. Lease expenses for finance leases consist of depreciation of the assets, which is recognized on a straight-line basis over the useful life of the assets as an operating expense, and interest expense using the effective interest method over the lease term.
12
Warrant Liabilities
The Company classifies warrants to purchase shares of its common stock as liabilities on its consolidated balance sheets as such warrants may result in delivery of a variable number of shares or delivery of a settlement amount that is not solely indexed to the Company’s own stock. These warrants were initially recorded at fair value on the grant date, and are subsequently remeasured to fair value at the end of each reporting period with changes in fair value recognized as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss. The Company will continue to adjust the liabilities until the earlier of exercise or expiration of the warrant.
The fair values of these warrant liabilities are determined using a Black-Scholes option-pricing model. The valuation model used incorporates assumptions and estimates, which the Company assesses at each financial reporting period as additional information impacting the assumptions is obtained. Estimates and assumptions impacting the fair value measurement include the fair value per share of the underlying shares, the remaining contractual term of the warrants, risk-free interest rate, expected dividend yield and expected volatility of the price of the underlying shares. The fair value of the underlying shares represents the closing price of its common stock traded on the Nasdaq Global Market. The expected volatility assumption is based on a blend of historical volatilities of the Company’s share price and those of its publicly traded peer companies. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrant. The expected dividend yield for the common stock warrants is
This fair value measurement of the warrant liabilities is based on significant inputs that are not observable in the market and represent a Level 3 measurement. See Note 6—“Warrant Liabilities”.
Stock-Based Compensation
The Company measures all stock options and other stock-based awards based on their fair value on the date of the grant. Those awards typically have a graded vesting schedule and compensation expense for awards with only service conditions is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. Compensation costs recognized for performance-based awards reflect the number of awards that are expected to vest during the requisite service period and are recognized using an accelerated attribution method. Upon final determination of the performance conditions achieved, the compensation costs are adjusted to reflect those awards that ultimately vest. Historical performance patterns, to the extent that they are indicative to the performance conditions to be achieved, are used in developing estimates for the probability of attaining these performance conditions.
The Company classifies stock-based compensation expense in its condensed consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.
The Company uses the Black-Scholes option pricing model, which incorporates assumptions and estimates, to measure the fair value of its option awards on the date of grant of each stock option award. The Company considers the fair value of its common stock to be equal to the closing price of its common stock traded on the Nasdaq Global Market. The expected volatility assumption is based on a blend of historical volatilities of the Company’s share price and those of its publicly traded peer companies. The expected term assumption for employee grants is determined by using the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is based on the rate of the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is
Recently Adopted Accounting Pronouncements
In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other- Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The ASU simplifies the guidance around capitalization of software development costs. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, with early adoption permitted. The Company elected to early adopt ASU 2025-06 effective January 1, 2026. The adoption had no material impact on the Company’s condensed consolidated financial statements and related disclosures.
13
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”), which is intended to provide more detailed and disaggregated information about significant expense categories, such as purchases of inventory, employee compensation, depreciation and amortization, and selling expenses. This new standard, including related updates, is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. The Company is currently assessing the impact ASU 2024-03 will have on its condensed consolidated financial statements, including its footnote disclosures.
3. Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of fair value hierarchy utilized to determine such fair values:
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Fair Value measurements as of |
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(in thousands) |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets: |
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Cash equivalents—money market funds |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Liabilities: |
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Warrant liabilities, long-term |
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$ |
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$ |
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$ |
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$ |
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Notes payable, long-term |
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$ |
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$ |
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$ |
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$ |
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Fair Value measurements as of |
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(in thousands) |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets: |
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Cash equivalents—money market funds |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Liabilities: |
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Warrant liabilities, long-term |
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$ |
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$ |
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$ |
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$ |
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Notes payable, long-term |
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$ |
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$ |
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$ |
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$ |
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During the six months ended June 30, 2026 and 2025, there were
See Note 5—“Notes Payable” for the discussion of the fair value methodology of the notes payable and a rollforward of the fair value. See Note 6—“Warrant Liabilities” for the discussion of the fair value methodology of the stock warrants and a rollforward of the fair value.
4. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
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June 30, |
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December 31, |
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(in thousands) |
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2026 |
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2025 |
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Payroll and payroll-related expenses |
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$ |
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$ |
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Research and development services |
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Professional fees and consulting services |
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Other current liabilities |
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$ |
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$ |
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14
5. Notes Payable
2023 Notes
On September 7, 2023, the Company entered into a credit agreement (the “Credit Agreement”) with certain lenders (the “2023 Lenders”) that provided for term loans up to aggregate principal amount of $
In connection with the issuance of the first tranche of the 2023 Notes, the Company issued to the 2023 Lenders warrants to purchase, at the holders’ choice, shares of the Company’s Series F Convertible Preferred Stock, the most senior series of Preferred Stock of the Company that is then authorized, or the Company’s common stock. The warrants are recorded as part of the warrant liabilities on the condensed consolidated balance sheet.
The Company elected to apply the fair value option to the 2023 Notes in accordance with ASC 825, Financial Instruments. Accordingly, the 2023 Notes are marked to market at the end of each reporting period, with changes in fair value recognized as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss. The fair value was estimated using a discounted cash flow model by discounting projected future cash flows associated with the 2023 Notes to their present value. The discount rate used in the model is based on observable market yields for similarly rated instruments, adjusted for any specific risks inherent in the 2023 Notes, which is a Level 3 fair value measurement and requires judgment to determine at each period end. Accrued interest on the 2023 Notes is incorporated into the determination of the fair value of the 2023 Notes.
This fair value measurement is based on significant inputs that are not observable in the market and represent a Level 3 measurement. The following table provides a rollforward of the fair value of the 2023 Notes:
(in thousands) |
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Fair Value |
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Balance as of December 31, 2025 |
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$ |
|
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Increase in fair value |
|
|
|
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Payment of interest |
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|
( |
) |
Balance as of June 30, 2026 |
|
$ |
|
|
15
6. Warrant Liabilities
July 2023 Warrants
In July 2023, the Company issued fully vested warrants to purchase shares of the Company’s common stock in connection with the issuance of the amended and restated 2022 Convertible Notes (the “July 2023 Warrants”). The July 2023 Warrants were immediately exercisable for a variable number of shares based on the principal amount of the 2022 Convertible Notes, as amended, of $
The fair value of the July 2023 Warrants was recorded as part of the warrant liabilities on the condensed consolidated balance sheet. The Company remeasures the fair value at the end of each reporting period, with any adjustments being recorded as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss.
The fair value of the July 2023 Warrants was determined using the Black-Scholes valuation model with the following assumptions:
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June 30, |
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2026 |
Risk-free interest rate |
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Expected term (in years) |
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Expected volatility |
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Expected dividend yield |
|
The following table provides a rollforward of the fair value of the July 2023 Warrants:
(in thousands) |
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Fair Value |
|
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Balance as of December 31, 2025 |
|
$ |
|
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Decrease in fair value |
|
|
( |
) |
Balance as of June 30, 2026 |
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$ |
|
|
September 2023 Warrants
In September 2023, in connection with the issuance of the 2023 Notes, the Company issued fully vested warrants to purchase, at the holders’ choice, shares of the Company’s Series F Convertible Preferred Stock, the most senior series of Preferred Stock of the Company that is then authorized, or the Company’s common stock (the “September 2023 Warrants”). The September 2023 Warrants are immediately exercisable for a variable number of shares based on a total fixed dollar value of $
The fair value of the September 2023 Warrants was recorded as part of the warrant liabilities on the condensed consolidated balance sheet. The Company remeasures the fair value at the end of each reporting period, with any adjustments being recorded as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss.
16
The fair value of the September 2023 Warrants was determined using the Black-Scholes valuation model with the following assumptions:
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June 30, |
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2026 |
Risk-free interest rate |
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Expected term (in years) |
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Expected volatility |
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Expected dividend yield |
|
The following table provides a rollforward of the fair value of the September 2023 Warrants:
(in thousands) |
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Fair Value |
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Balance as of December 31, 2025 |
|
$ |
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Decrease in fair value |
|
|
( |
) |
Balance as of June 30, 2026 |
|
$ |
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August 2025 Warrants
On August 6, 2025, the Company entered into an underwriting agreement with Ladenburg Thalmann & Co. Inc. (“Ladenburg”), pursuant to which it issued and sold
The Tranche A Warrants and Tranche B Warrants were issued on August 7, 2025. The Tranche A Warrants were immediately exercisable and the Tranche B Warrants were only exercisable upon receipt of required stockholder approval, which approval was received on October 3, 2025. See details of each set of warrants below.
Tranche A Warrants
Each Tranche A Warrant had an exercise price of $
Tranche B Warrants
Each Tranche B Warrant has an exercise price per share of our common stock equal to $
The fair value of the Tranche B Warrants was recorded as part of the warrant liabilities on the condensed consolidated balance sheet. The Company remeasures the fair value at the end of each reporting period, with any adjustments being recorded as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive loss. As of June 30, 2026, Tranche B Warrants to purchase
Tranche B Warrants fair value was determined using the Black-Scholes valuation model with the following key assumptions, which was based on significant inputs that are not observable in the market and represented a Level 3 measurement.
17
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June 30, |
|
2026 |
Risk-free interest rate |
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Expected term (in years) |
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Expected volatility |
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Expected dividend yield |
The following table provides a rollforward of the fair value of the Tranche B Warrants:
(in thousands) |
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Fair Value |
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Balance as of December 31, 2025 |
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$ |
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Decrease in fair value |
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( |
) |
Balance as of June 30, 2026 |
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$ |
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7. Commitments and Contingencies
Leases
The following table summarizes the future minimum lease payments for operating and finance leases as of June 30, 2026:
(in thousands) |
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2026 (Remaining) |
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$ |
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2027 |
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2028 |
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2029 |
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2030 |
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Thereafter |
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Total future minimum lease payments |
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$ |
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Please see Note 7—“Leases” in the Notes to the consolidated financial statements included in Item 8 of the Company’s Annual Report for further discussion of the Company’s material lease agreements.
8. Preferred and Common Stock
Preferred Stock
On January 26, 2024, the Company’s board of directors approved an Amended and Restated Certificate of Incorporation, authorizing the Company to issue
Common Stock
On January 26, 2024, the Company’s board of directors approved an Amended and Restated Certificate of Incorporation, authorizing the Company to issue
In November 2025, the Company entered into exchange agreements with certain investors pursuant to which these investors exchanged
S-3 Registration Statement
On March 3, 2025, the Company filed a Registration Statement on Form S-3 with the SEC, which was subsequently amended on March 13, 2025 (as amended, the “S-3 Registration Statement”). The S-3 Registration Statement became effective on March 18, 2025. It contains a base prospectus, which covers the offering, issuance and sale of up to $
18
million in the aggregate of the securities from time to time in one or more offerings.
At-The-Market Offering
On March 3, 2025, concurrently with the filing of the S-3 Registration Statement, the Company entered into a sales agreement with Jefferies LLC as sales agent (the “Sales Agreement”) and filed a prospectus supplement under an at-the-market offering (the “ATM Offering”) covering the offering, issuance and sale of up to a maximum aggregate offering price of $
9. Stock-Based Compensation
2011 Stock Incentive Plan
The Company’s 2011 Stock Incentive Plan, as amended, (the “2011 Plan”) provided for the Company to grant restricted stock, restricted stock units, incentive stock options and nonqualified stock options with respect to shares of common stock to employees, officers, directors, consultants and advisors of the Company. Incentive stock options could only be granted to employees. The 2011 Plan is administered by the board of directors, or at the discretion of the board of directors, by a committee of the board of directors. The exercise prices, vesting schedules and other restrictions of awards were determined at the discretion of the board of directors or by a committee of the board of directors if so delegated, except that the exercise price per share of stock options could not be less than
2024 Incentive Award Plan
On
There were
2024 Employee Stock Purchase Plan
On
The 2024 ESPP Plan provides for rolling six-month offering periods. The Company began its first offering period on August 1, 2025, and issued
19
were
Stock-Based Compensation Expense
The Company recorded stock-based compensation expense related to its ESPP, stock options, and restricted stock units in the following expense categories within its condensed consolidated statements of operations and comprehensive loss:
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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(in thousands) |
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2026 |
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2025 |
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2026 |
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2025 |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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Selling, general and administrative |
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$ |
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$ |
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$ |
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$ |
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During the six months ended June 30, 2026, the Company granted to its employees stock options to purchase a total of
10. Net Loss Per Share
The following securities that could potentially dilute basic net loss per share in the future were not included in the computation of diluted net loss per share for the periods presented, because to do so would have been antidilutive:
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Three and Six Months Ended June 30, |
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2026 |
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2025 |
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Outstanding stock options |
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Outstanding restricted stock units |
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Common stock under employee stock purchase plan |
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Common stock warrants |
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Total |
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The table presented above does not include the number of shares that may be issued upon exercises of the common stock warrants issued in connection with the 2022 Convertible Notes and the 2023 Notes because the number of shares to be issued under these warrants are variable based on a variable exercise price at the warrant holders’ option.
11. Segment Information
The Company has identified
20
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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(in thousands) |
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2026 |
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2025 |
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2026 |
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2025 |
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Operating expenses |
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Research and development: |
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Revita direct program expenses |
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$ |
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$ |
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$ |
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$ |
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Rejuva direct program expenses |
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Indirect expenses |
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Personnel-related expenses |
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|
||||
Total research and development expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense), net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Segment net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with (i) our unaudited condensed consolidated financial statements and related notes, appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) the audited consolidated financial statements and related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2025 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”), on March 24, 2026 (“Annual Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, contains forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” sections of this Quarterly Report on Form 10-Q and our Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Business Overview
We are a clinical-stage metabolic therapeutics company focused on pioneering novel approaches to treat obesity and type 2 diabetes (“T2D”). Our Revita® and Rejuva® candidates are designed to target root causes of metabolic diseases, allowing us to advance metabolic disease treatment from chronic management towards prevention and reversion of the disease. For a detailed description of our business, product candidates, and development programs, refer to our Annual Report.
Key Developments During the Three Months Ended June 30, 2026
Revita. REVEAL-1 Cohort.
In June 2026, we announced positive one-year results from the REVEAL-1 Cohort providing real world-evidence of durable weight maintenance after a single Revita procedure. Participants retained approximately 78% of their GLP-1-induced weight loss at one year, with a mean total body weight change of 5.3% ± 2.1% (LS means ± SE; n=15), and 33% continued to lose weight; by comparison, published third-party studies report approximately 15% weight regain by this time point after GLP-1 withdrawal alone. All participants maintained at least 5% of their GLP-1-induced weight loss through one year, consistent with the responder definition used as the second co-primary endpoint in the REMAIN-1 Pivotal Cohort. An efficacy estimand in the full analysis set was consistent, with a mean total body weight change of 5.8% ± 2.0% (LS means ± SE; n=22). Glycemic control was maintained, with minimal change in HbA1c (0.08% ± 0.08%; LS means ± SE from MMRM; n=15) versus the approximately 0.4% increase observed after GLP-1 discontinuation in the STEP-1 trial extension. Consistent with prior studies of Revita, the procedure was well tolerated. No procedure-related serious adverse events and no new treatment-emergent adverse events were observed. Mild treatment-emergent adverse events occurred in eight of 22 participants (36%), were transient and self-limited, and all occurred within the first month of treatment. No late device-related adverse events were observed, and all adverse events were consistent with prior Revita experience and similar to routine upper endoscopy findings.
Revita. REMAIN-1 Midpoint Cohort.
In July 2026, we announced one-year data from the REMAIN-1 Midpoint Cohort. In the full modified intention-to-treat (“mITT”) population (N=45), a single Revita procedure reduced weight regain by approximately 40% versus sham at one year (least-squares mean weight regain of 7.8% versus 13.0% of body weight; n=29 versus 16 for Revita versus sham). The Midpoint Cohort is not powered for formal statistical significance, and results are descriptive. Participants who received complete duodenal ablation (>14 cm) maintained approximately 81% of GLP-1-induced weight loss at one year, compared with 48% in sham participants (least-squares mean weight regain of 4.8% versus 13.0% of body weight; n=17 versus 16 for Revita versus sham), reflecting a reduction in weight regain of over 60% versus sham, consistent with earlier findings that more complete duodenal ablation drives greater treatment effect. In an optimized population of participants who received complete duodenal ablation (>14 cm) and had higher GLP-1 run-in weight loss (≥17.5%), Revita maintained approximately 84% of GLP-1-induced weight loss at one year versus 46% with sham (least-squares mean weight regain of 4.1% versus 13.5% of body weight; n=10 versus 8 for Revita versus sham). As a reference point for the Pivotal Cohort, the proportion of Revita participants maintaining at least 5% total body weight loss relative to their pre-tirzepatide weight at one year was 73% in the Midpoint Cohort mITT population, rising to 91% in those with complete duodenal ablation (>14 cm). No device- or procedure-related serious adverse events occurred, and no new device-related treatment-emergent adverse events were observed between six and 12 months. Overall treatment-emergent adverse event rates were comparable between arms
22
through one year (24% Revita versus 25% sham).
Rejuva.
In April 2026, we received clinical trial application (“CTA”) authorization in the Netherlands for RJVA-001, our lead gene therapy candidate, enabling initiation of the anticipated Phase 1/2 first-in-human study evaluating RJVA-001 in adults with inadequately controlled T2D. Subject to site activation, we expect to dose the first patient with RJVA-001 and report preliminary data in the second half of 2026. We also plan to conduct the study at sites in Australia. In July 2026, we received ethics committee approval in Australia. We also advanced RJVA-002, our dual GIP/GLP-1 gene therapy candidate, through preclinical development.
Anticipated 2026 Revita Milestones
With randomization complete of the REMAIN-1 Pivotal Cohort, we are advancing toward multiple anticipated clinical and regulatory milestones toward pivotal readout and potential U.S. regulatory submission. In March 2026 in connection with its regulatory strategy, the Company received pre-submission feedback from the FDA in which it acknowledged that the safety profile of the Revita DMR System, based on clinical data from over 300 procedures, is consistent with a Class II device classification. As in all applications, the FDA indicated that final pathway determinations will be made following review of the complete safety dataset which the Company intends to include in its potential De Novo marketing application submission.
Anticipated 2026 Rejuva Milestones
We are pursuing opportunities to strengthen our balance sheet and fund our path towards potential commercialization, leveraging the achievement of clinical data milestones.
Management believes that our available cash and cash equivalents balance of $47.1 million as of June 30, 2026 will be sufficient to fund our operating expenses and capital expenditure requirements into early 2027. Importantly, we are well funded through multiple key clinical and regulatory milestones in 2026, including the anticipated topline six-month randomized data from the REMAIN-1 Pivotal Cohort, anticipated De Novo marketing application submission in post-GLP-1 weight maintenance, and initial dosing and preliminary data from our RJVA-001 clinical program. For additional information regarding our liquidity, funding requirements and going concern assessment, see “Funding Requirements and Going Concern” below and the section titled “Risk Factors” in our Annual Report.
Components of our Condensed Consolidated Results of Operations
There have been no material changes to the components of our results of operations described in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report, except as stated below.
23
The following table reflects our research and development expenses, including direct program-specific expenses summarized by program, indirect expenses, and personnel-related expenses recognized during each period presented:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Direct program-specific expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revita |
|
$ |
3,676 |
|
|
$ |
8,181 |
|
|
$ |
8,642 |
|
|
$ |
14,935 |
|
Rejuva |
|
|
2,010 |
|
|
|
4,661 |
|
|
|
3,913 |
|
|
|
7,878 |
|
Total direct program-specific expenses |
|
|
5,686 |
|
|
|
12,842 |
|
|
|
12,555 |
|
|
|
22,813 |
|
Indirect expenses |
|
|
2,059 |
|
|
|
1,840 |
|
|
|
3,950 |
|
|
|
3,853 |
|
Personnel-related expenses (including stock-based compensation) |
|
|
6,067 |
|
|
|
6,469 |
|
|
|
12,905 |
|
|
|
13,920 |
|
Total research and development expenses |
|
$ |
13,812 |
|
|
$ |
21,151 |
|
|
$ |
29,410 |
|
|
$ |
40,586 |
|
Critical Accounting Policies and Significant Estimates
Our management’s 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 unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience, known trends and events, and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities and recorded amounts of expenses that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are described in more detail in Note 2 – “Significant Accounting Policies” to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q as well as Note 2 – “Significant Accounting Policies” to our audited financial statements as of and for the year ended December 31, 2025 included in our Annual Report.
Results of Operations
Comparison of three months ended June 30, 2026 and 2025
The following table summarizes our condensed consolidated results of operations for the three months ended June 30, 2026 and 2025.
|
|
Three Months Ended June 30, |
|
|
Change |
|
||||||||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
$ |
13,812 |
|
|
$ |
21,151 |
|
|
$ |
(7,339 |
) |
|
|
(34.7 |
%) |
Selling, general and administrative |
|
|
5,284 |
|
|
|
4,928 |
|
|
|
356 |
|
|
|
7.2 |
% |
Total operating expenses |
|
|
19,096 |
|
|
|
26,079 |
|
|
|
(6,983 |
) |
|
|
(26.8 |
%) |
Loss from operations |
|
|
(19,096 |
) |
|
|
(26,079 |
) |
|
|
6,983 |
|
|
|
(26.8 |
%) |
Other expense, net |
|
|
(6,442 |
) |
|
|
(1,810 |
) |
|
|
(4,632 |
) |
|
|
255.9 |
% |
Net loss and comprehensive loss |
|
$ |
(25,538 |
) |
|
$ |
(27,889 |
) |
|
$ |
2,351 |
|
|
|
(8.4 |
%) |
Research and Development Expenses
Research and development expenses decreased by $7.3 million, or 34.7%, during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The decrease was primarily related to reduced spending on our Revita and Rejuva programs.
24
Revita-related expenses decreased by $4.5 million primarily due to decreased clinical expenses. Rejuva-related expenses decreased by $2.7 million, primarily driven by lower spending on drug product manufacturing, device engineering, and pre-clinical research activities, partially offset by costs incurred to advance the program toward clinical readiness.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $0.4 million, or 7.2%, during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was primarily driven by higher stock compensation expenses.
Other Expense, Net
Other expense, net, of $6.4 million during the three months ended June 30, 2026 was primarily attributable to a $5.5 million loss from the change in fair value of our warrant liabilities and a $1.4 million loss from the change in fair value of the 2023 Notes (as defined below), partially offset by $0.4 million of net interest income. Other expense, net, of $1.8 million during the three months ended June 30, 2025 was primarily attributable to a $1.7 million loss from the change in fair value of the 2023 Notes and a $0.3 million loss from the change in fair value of our warrant liabilities, partially offset by $0.2 million of net interest income.
Change in fair value of warrant liabilities was mainly a result of the fluctuation of the value of the underlying shares of our common stock. The higher loss from the change in fair value of warrant liabilities during the three months ended June 30, 2026 was mainly related to the warrants issued as part of the equity financing completed in August 2025. Change in fair value of the 2023 Notes were primarily driven by a combination of interest on the notes payable and the fluctuation of market interest rates.
Comparison of six months ended June 30, 2026 and 2025
The following table summarizes our condensed consolidated results of operations for the six months ended June 30, 2026 and 2025.
|
|
Six Months Ended |
|
|
Change |
|
||||||||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|
||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
$ |
29,410 |
|
|
$ |
40,586 |
|
|
$ |
(11,176 |
) |
|
|
(27.5 |
%) |
Selling, general and administrative |
|
|
10,506 |
|
|
|
10,252 |
|
|
|
254 |
|
|
|
2.5 |
% |
Total operating expenses |
|
|
39,916 |
|
|
|
50,838 |
|
|
|
(10,922 |
) |
|
|
(21.5 |
%) |
Loss from operations |
|
|
(39,916 |
) |
|
|
(50,838 |
) |
|
|
10,922 |
|
|
|
(21.5 |
%) |
Other income (expense), net |
|
|
23,596 |
|
|
|
(786 |
) |
|
|
24,382 |
|
|
|
(3,102.0 |
%) |
Net loss and comprehensive loss |
|
$ |
(16,320 |
) |
|
$ |
(51,624 |
) |
|
$ |
35,304 |
|
|
|
(68.4 |
%) |
Research and Development Expenses
Research and development expenses decreased by $11.2 million, or 27.5%, during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The decrease was primarily related to reduced spending on our Revita and Rejuva programs, as well as lower personnel-related expenses.
Revita-related expenses decreased by $6.3 million primarily due to decreased clinical expenses. Rejuva-related expenses decreased by $4.0 million, primarily driven by lower spending on drug product manufacturing, device engineering, and pre-clinical research activities, partially offset by costs incurred to advance the program toward clinical readiness. Personnel-related expenses decreased by $1.0 million, primarily driven by lower headcount as a result of our strategic reprioritization in the first quarter of 2025.
Selling, General and Administrative Expenses
Selling, general and administrative expenses during the six months ended June 30, 2026 were $10.5 million, consistent with the $10.3 million incurred during the six months ended June 30, 2025.
25
Other Income (Expense), Net
Other income, net, of $23.6 million during the six months ended June 30, 2026 was primarily attributable to a $24.6 million gain from the change in fair value of our warrant liabilities and $1.0 million of net interest income, partially offset by a $2.0 million loss from the change in fair value of the 2023 Notes. Other expense, net, of $0.8 million during the six months ended June 30, 2025 was primarily attributable to a $2.0 million loss from the change in fair value of the 2023 Notes, partially offset by a $0.5 million gain from the change in fair value of our warrant liabilities and $0.7 million of net interest income.
Change in fair value of warrant liabilities was mainly a result of the fluctuation of the value of the underlying shares of our common stock. The higher gain from the change in fair value of warrant liabilities during the six months ended June 30, 2026 was mainly related to the warrants issued as part of the equity financing completed in August 2025. Change in fair value of the 2023 Notes were primarily driven by a combination of interest on the notes payable and the fluctuation of market interest rates.
Non-GAAP Financial Measures
In addition to our results determined in accordance with U.S. GAAP, we also evaluate our performance using Adjusted EBITDA, a non-GAAP financial measure. We define Adjusted EBITDA as net loss adjusted to exclude (i) interest income, net, (ii) depreciation expense, (iii) stock-based compensation expense, (iv) changes in the fair value of notes payable and (v) changes in the fair value of warrant liabilities.
We present Adjusted EBITDA as supplemental information because management believes it provides additional insight into our operating performance and facilitates comparisons of our results from period to period by excluding items that are non-cash or non-operational in nature and may vary in magnitude. Management uses Adjusted EBITDA in evaluating our operating performance and in planning and forecasting future periods.
Adjusted EBITDA should not be considered in isolation or as a substitute for, or superior to, net loss or any other measure of financial performance prepared in accordance with GAAP. Adjusted EBITDA does not reflect interest income, depreciation, stock-based compensation expense, or changes in the fair value of certain financial instruments, each of which may be significant. In addition, our definition of Adjusted EBITDA may differ from similarly titled measures used by other companies and therefore may not be comparable.
A reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA is presented below.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net loss |
|
$ |
(25,538 |
) |
|
$ |
(27,889 |
) |
|
$ |
(16,320 |
) |
|
$ |
(51,624 |
) |
Interest income, net |
|
|
(431 |
) |
|
|
(226 |
) |
|
|
(1,024 |
) |
|
|
(729 |
) |
Depreciation |
|
|
278 |
|
|
|
270 |
|
|
|
559 |
|
|
|
560 |
|
EBITDA |
|
|
(25,691 |
) |
|
|
(27,845 |
) |
|
|
(16,785 |
) |
|
|
(51,793 |
) |
Stock-based compensation expense |
|
|
2,496 |
|
|
|
1,785 |
|
|
|
5,027 |
|
|
|
3,191 |
|
Change in fair value of notes payable |
|
|
1,382 |
|
|
|
1,673 |
|
|
|
1,992 |
|
|
|
1,956 |
|
Change in fair value of warrant liabilities |
|
|
5,484 |
|
|
|
348 |
|
|
|
(24,571 |
) |
|
|
(477 |
) |
Adjusted EBITDA |
|
$ |
(16,329 |
) |
|
$ |
(24,039 |
) |
|
$ |
(34,337 |
) |
|
$ |
(47,123 |
) |
Liquidity and Capital Resources
We manage our cash and capital structure to maintain our financial condition and maintain flexibility for future strategic initiatives. We continuously assess our working capital needs, debt and leverage levels, debt maturity schedule, capital expenditure requirements and future investments.
26
Loan and Security Agreements
2023 Notes
On September 7, 2023, we entered into a credit agreement, as amended from time to time (the “Credit Agreement”), with Symbiotic Capital Opportunities Holding, L.P. and Catalio Structured Opportunities AIV I LP (the “2023 Lenders”) that provided for term loans up to an aggregate principal amount of $45.0 million (the “2023 Notes”) in two tranches. The first tranche, with a principal amount of $30.0 million, was extended on September 7, 2023, resulting in net proceeds of approximately $28.4 million. The second tranche, with a principal amount of $15.0 million, would have been extended upon our achievement of certain operating and funding milestones as defined in the Credit Agreement, by July 31, 2024. Due to a shift in business strategy to include the weight maintenance study, we decided not to pursue the milestones required to access the second tranche. As a result, the second tranche was not extended.
The Credit Agreement, as amended, contains financial covenants, including a minimum liquidity covenant requiring us to maintain a minimum $10.0 million balance in cash and cash equivalents on deposit in accounts, subject to certain exceptions. As of June 30, 2026, we were in compliance with the minimum liquidity covenant and other terms of the arrangement.
The outstanding balances under the 2023 Notes bear interest at a floating annual rate equal to the greater of 5.5% above the Wall Street Journal prime rate or 13.25%. On and prior to September 30, 2024, 6.0% of the interest is payable in kind and added to the outstanding principal amount of the 2023 Notes. Beginning September 30, 2026, we were required to make principal payments in the amount of 1.5% of the aggregate principal amount outstanding, including accrued PIK interest, each month. Under the terms of the Credit Agreement, the first principal payment date may be extended to September 30, 2027, at our election, if certain financing milestones as defined in the Credit Agreement are achieved on or prior to September 30, 2026. During 2024, we achieved the defined milestones and elected to extend the first principal payment date to September 30, 2027. In addition, upon any principal payment, we are required to make an additional payment to the 2023 Lenders of a 6.0% fee (the “Exit Fee”), over the principal and accrued PIK interest paid. The aggregate Exit Fee of the 2023 Notes should equal to 6.0% of the total commitment of $45.0 million plus all accrued PIK interest. All remaining outstanding principal balance, accrued interest and Exit Fee on the 2023 Notes shall be due and payable on the maturity date of September 7, 2028.
As of June 30, 2026, the balance of the 2023 Notes was carried at its fair value of $30.4 million.
S-3 Registration Statement
On March 3, 2025, we filed a Registration Statement on Form S-3 with the SEC, which was subsequently amended on March 13, 2025 (as amended, the “S-3 Registration Statement”). The S-3 Registration Statement became effective on March 18, 2025. It contains a base prospectus, which covers the offering, issuance and sale of up to $300.0 million in the aggregate of the securities from time to time in one or more offerings.
At-The-Market Offering
On March 3, 2025, concurrently with the filing of the S-3 Registration Statement, we entered into a sales agreement with Jefferies LLC as sales agent (the “Sales Agreement”) and filed a prospectus supplement under an at-the-market offering (the “ATM Offering”) covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $100.0 million of our common stock. During the term of the ATM Offering, we issued and sold 4,701,960 shares of our common stock at a weighted average price of $1.53 per share, resulting in net proceeds of approximately $6.8 million, after deducting commissions and offering expenses. On March 23, 2026, we notified Jefferies LLC of our intention to terminate the Sales Agreement pursuant to its terms. As a result, the Sales Agreement was terminated effective April 6, 2026 and no further sales have been or will be made thereunder after such date.
August 2025 Warrants
In connection with our underwritten public offering that closed on August 7, 2025 (the “August 2025 Offering”), we issued warrants to purchase shares of our common stock, including the Tranche A and Tranche B Warrants (collectively the “August 2025 Warrants”). For additional information regarding the August 2025 Offering and the terms of the August 2025 Warrants, refer to Note 1 to the consolidated financial statements included in our Annual Report.
27
All Tranche A Warrants were exercised or expired by December 31, 2025. No Tranche B Warrants were exercised during the three and six months ended June 30, 2026. As of June 30, 2026, Tranche B Warrants to purchase 21,147,002 shares of our common stock remained outstanding, each with an exercise price of $1.05 per share, subject to certain adjustments, and expiring on October 3, 2030.
Funding Requirements and Going Concern
Our future success is dependent on our ability to develop product candidates, generate significant revenue, and upon our ability to attain profitable operations. We are subject to a number of risks similar to other early-stage life science companies, including, but not limited to, successful discovery and development of our product candidates, raising additional capital with favorable terms, development by our competitors of new technological innovations, protection of proprietary technology and market acceptance of our products. The successful discovery and development of product candidates requires substantial capital which may not be available to us on favorable terms or not at all.
To date, we have financed our operations primarily through our equity and debt financings. We have a history of operating losses and had an accumulated deficit of $572.6 million as of June 30, 2026. Based on our current business plans, we believe that our available cash and cash equivalents of $47.1 million as of June 30, 2026, will be sufficient to fund our operating expenses and capital expenditure requirements into early 2027, through multiple key clinical and regulatory milestones. Our estimate as to how long we expect our existing cash and cash equivalents will be able to continue to fund our operating expenses and capital expenditure requirement is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we expect. However, we believe our existing cash resources will not be sufficient to fund our current operating plan for at least twelve months from the issuance date of this Quarterly Report on Form 10-Q. As a result, we have concluded that substantial doubt exists about our ability to continue as a going concern for at least one year after the date that these financial statements are issued. The accompanying unaudited interim condensed consolidated financial statements in this Quarterly Report on Form 10-Q have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The unaudited interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
Management intends to mitigate the conditions and events that raise substantial doubt about our ability to continue as a going concern entity by (i) negotiating other cash equity, debt or strategic financing, (ii) continuing to pursue the necessary regulatory approvals to launch commercially in the U.S. market, and (iii) executing cost-cutting measures to manage cash burn. However, there can be no assurances that the current plans will generate any liquidity to us or be available on terms acceptable to us.
Because of the numerous risks and uncertainties associated with product development, and because the extent to which we may enter into collaborations with third parties for the development of our product candidates is unknown, we may incorrectly estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including, but not limited to:
28
Identifying potential product candidates and conducting preclinical testing and clinical studies is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve product sales in the United States or elsewhere. In addition, our product candidates, if approved, may not achieve commercial success. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.
Our expectation with respect to our ability to fund current planned operations is based on estimates that are subject to risks and uncertainties. Our operating plan may change as a result of many factors currently unknown to management and there can be no assurance that the current operating plan will be achieved in the time frame anticipated by us, and we may need to seek additional funds sooner than planned.
Adequate additional funds may not be available to us on acceptable terms, or at all. Market volatility resulting from pandemics, monetary policy changes, or other factors could also adversely impact our ability to access capital as and when needed. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Additional debt financings and convertible preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require the issuance of additional warrants, which could potentially dilute your ownership interest.
If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, 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. If we are unable to raise additional funds through equity or debt financings when needed, we may have to significantly delay, reduce or eliminate some or all of our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
For additional information on risks associated with our substantial capital requirements, please see the section titled “Risk Factors” in our Annual Report.
We will require substantial additional capital beyond the proceeds from our prior financings to fund our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and development programs or future commercialization efforts.
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented:
|
|
Six Months Ended June 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Net cash used in operating activities |
|
$ |
(38,378 |
) |
|
$ |
(46,278 |
) |
Net cash used in investing activities |
|
|
— |
|
|
|
(546 |
) |
Net cash provided by financing activities |
|
|
3,978 |
|
|
|
1,651 |
|
Net decrease in cash, cash equivalents and restricted cash |
|
$ |
(34,400 |
) |
|
$ |
(45,173 |
) |
Operating Activities
Cash used in operating activities of $38.4 million for the six months ended June 30, 2026 was primarily driven by spending on our ongoing clinical studies, Rejuva-related research and clinical readiness activities, professional services related to our corporate and general administrative activities, as well as personnel-related expenses, including salaries, bonuses, and other compensatory benefits. Cash used in operating activities resulted primarily from our net loss of $16.3 million adjusted for
29
net non-cash activities of $18.1 million. These non-cash activities primarily consisted of a $24.6 million non-cash gain from the change in fair value of warrant liabilities, a $0.1 million non-cash gain from the change in fair value of notes payable, $5.0 million in stock-based compensation expense, $0.9 million non-cash operating lease expense, and $0.6 million depreciation expense. Cash used in operating activities was also impacted by changes in working capital and other assets and liabilities of $3.9 million.
Cash used in operating activities of $46.3 million for the six months ended June 30, 2025 was primarily driven by spending on our ongoing clinical studies, Rejuva-related research activities, professional services related to our corporate and general administrative activities, as well as personnel-related expenses, including salaries, bonuses, and other compensatory benefits. Cash used in operating activities resulted primarily from our net loss of $51.6 million adjusted for net non-cash activities of $4.0 million. These non-cash activities primarily consisted of $3.2 million in stock-based compensation, $0.8 million non-cash operating lease expense and $0.6 million depreciation, partially offset by $0.5 million non-cash gain from the change in fair value of warrant liabilities and $0.2 million non-cash gain from the change in fair value of notes payable. Cash used in operating activities was also impacted by changes in working capital and other assets and liabilities of $1.3 million.
Investing Activities
We did not have any investing related cashflow activities for the six months ended June 30, 2026. Cash used in investing activities for the six months ended June 30, 2025, was primarily related to the purchase of laboratory and manufacturing equipment.
Financing Activities
Cash provided by financing activities of $4.0 million for the six months ended June 30, 2026 was related to $4.1 million proceeds received in January 2026 from Tranche A warrants that were exercised in December 2025 and $0.2 million proceeds received from issuance of common stock under employee stock purchase plan, partially offset by $0.3 million principal payments made on finance lease obligations. Cash provided by financing activities of $1.7 million for the six months ended June 30, 2025 was primarily driven by net proceeds of $1.6 million from the issuance of common stock in connection with our ATM Offering and $0.3 million from stock option exercises, partially offset by $0.2 million of principal payments made on finance lease obligations.
Contractual Obligations and Commitments
We have entered into arrangements that contractually obligate us to make payments that will affect our liquidity and cash flows in future periods.
As of June 30, 2026, our lease commitments reflect payments due for our operating and finance leases. The operating leases include our corporate office and laboratory space in Burlington, MA that will expire in June 2034. The finance leases represent leases of laboratory equipment used in our Rejuva pre-clinical activities. As of June 30, 2026, our future contractual commitments for our leases were $49.3 million, of which $48.8 million were related to our operating leases. For additional information on our leases and timing of future payments, please see Note 7— “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in this Quarterly Report on this Form 10-Q.
We have also entered into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies, manufacturing, and other services and products for operating purposes. These contracts typically do not contain any minimum purchase commitments and provide for termination upon notice. Payments due upon cancellation generally consist only of payments for services provided or expenses incurred, including non-cancellable obligations of our service providers, up to the date of cancellation.
Recent Accounting Pronouncements
See Note 2—“Summary of Significant Accounting Policies” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.
30
JOBS Act Accounting Election
We are an “emerging growth company” within the meaning of the JOBS Act. Section 107(b) of the JOBS Act provides that an emerging growth company can leverage the extended transition period, provided in Section 102(b) of the JOBS Act, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. We have elected to use this extended transition period and, as a result, our financial statements may not be comparable to companies that comply with public company effective dates. We have also elected to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.
We would cease to be an emerging growth company on the date that is the earliest of (1) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (2) the last day of our fiscal year following the fifth anniversary of the date of the completion of our IPO; (3) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous three years; or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined in Item 10(f)(1) of Regulation S-K. As a result, pursuant to Item 305(e) of Regulation S-K, we are not required to provide the information required by this Item 3.
Item 4. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a 15(e) and 15d 15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2026, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
31
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
We are not subject to any material legal proceedings.
Item 1A. Risk Factors.
In addition to the information set forth in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, you should carefully consider the risks and uncertainties described in the Annual Report, including the disclosure therein under Part I, Item 1A, “Risk Factors.” Our business, financial condition, results of operations or prospects could be materially and adversely affected if any of these risks occurs. This Quarterly Report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain important factors, including those set forth below.
There were no material changes during the period covered in this Quarterly Report on Form 10-Q to the Risk Factors previously disclosed in Part I, Item 1A of the Annual Report, other than as set forth below.
Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common stock and our ability to access the capital markets.
In order to maintain this listing, we must satisfy the continued listing requirements and standards of Nasdaq, including a minimum closing bid price requirement for our common stock of $1.00 per share. On March 13, 2026, we received a notification letter from Nasdaq notifying us that, for the last 30 consecutive business days, the closing bid price for our common stock has been below the minimum $1.00 per share required for continued listing on Nasdaq pursuant to Nasdaq Listing Rule 5450(a)(1) (“Rule 5450(a)(1)”). We have 180 calendar days, or until September 9, 2026, to regain compliance with Rule 5450(a)(1) by maintaining a closing bid price of at least $1.00 per share for a minimum of 10 consecutive trading days, subject to Nasdaq’s discretion. If we do not regain compliance with Rule 5450(a)(1) by September 9, 2026, Nasdaq may notify us that our securities are subject to delisting from Nasdaq unless we timely request a hearing before a Nasdaq Hearings Panel (the “Panel”). Should such notice be received, we intend to timely request a hearing before the Panel. The hearing request will automatically stay any suspension or delisting of our securities and, as a result, we would expect that our common stock will continue to be listed and traded on Nasdaq pending the conclusion of the hearings process.
If we are unable to regain compliance within the applicable cure period, including any available extension, our common stock would be subject to delisting from Nasdaq. A delisting of our common shares could negatively impact us by, among other things, (i) reducing the liquidity and market price of our common shares; (ii) reducing the number of investors willing to hold or acquire our common shares, which could negatively impact our ability to raise equity financing; (iii) decreasing the amount of news and analyst coverage of us; (iv) limiting our ability to issue additional securities or obtain additional financing in the future; (v) limiting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets; and (vi) impairing our ability to provide equity incentives to our employees. In addition, delisting from Nasdaq may negatively impact our reputation and, consequently, our business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
None.
Use of Proceeds
None.
Purchases of equity securities by the issuer and affiliated purchasers
None.
32
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
(a) Disclosure in lieu of reporting on a Current Report on Form 8-K.
As previously disclosed in the Company’s Form 10-Q for the quarter ended March 31, 2026, the Company terminated the Sales Agreement pursuant to its terms. As a result, the Sales Agreement was terminated effective April 6, 2026.
(b) Material changes to the procedures by which security holders may recommend nominees to the board of directors.
None.
(c) Insider Trading Arrangements and Policies.
During the three months ended June 30, 2026, no director or officer of the Company
Item 6. Exhibits.
|
|
Incorporated by Reference |
|
|||
Exhibit |
Exhibit Description |
Form |
File No. |
Exhibit |
Filing |
Filed/ |
3.1 |
Amended and Restated Certificate of Incorporation of Fractyl Health, Inc. |
8-K |
001-41942 |
3.1 |
2/6/2024 |
|
3.2 |
Amended and Restated Bylaws of Fractyl Health, Inc. |
8-K |
001-41942 |
3.2 |
2/6/2024 |
|
4.1 |
Specimen Stock Certificate evidencing the shares of common stock. |
S‑1 |
333‑276046 |
4.1 |
12/14/2023 |
|
4.2 |
Fifth Amended and Restated Investors’ Rights Agreement, dated June 9, 2021, by and among Fractyl Health, Inc. and certain of its stockholders. |
S-1 |
333-276046 |
4.2 |
12/14/2023 |
|
31.1 |
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer |
|
|
|
|
* |
31.2 |
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer |
|
|
|
|
* |
32.1 |
Section 1350 Certification of Chief Executive Officer |
|
|
|
|
** |
32.2 |
Section 1350 Certification of Chief Financial Officer |
|
|
|
|
** |
101.INS |
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
* |
101.SCH |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
|
* |
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
|
|
* |
† Indicates a management contract or compensatory plan or arrangement.
* Filed herewith
** Furnished herewith
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
|
|
Fractyl Health, Inc. |
|
|
|
|
|
Date: August 10, 2026 |
|
By: |
/s/ Harith Rajagopalan |
|
|
|
Harith Rajagopalan, M.D., Ph.D. |
|
|
|
Co-Founder, Chief Executive Officer and Director |
|
|
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
|
Date: August 10, 2026 |
|
By: |
/s/ Lara Smith Weber |
|
|
|
Lara Smith Weber |
|
|
|
Chief Financial Officer and Treasurer |
|
|
|
(Principal Financial Officer and Principal Accounting Officer) |
|
|
|
|
34