Rein Therapeutics (RNTX) raises $57.5M and funds LTI-03 trial into 2028
Rein Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on fibrotic diseases and reported results for the three and six months ended June 30, 2026. The company’s lead candidate LTI-03 for idiopathic pulmonary fibrosis is in the Phase 2 RENEW trial, a multi-center randomized, double-blind, placebo-controlled study targeting about 120 patients, with interim data anticipated in the fourth quarter of 2026. Development of LTI-01 remains paused indefinitely to prioritize LTI-03.
The company generated no revenue and recorded a net loss of $6.4 million for the quarter and $12.2 million for the first half of 2026, similar to 2025. Operating expenses for the first half were $11.3 million, primarily research and development. As of June 30, 2026, cash, cash equivalents and investments totaled $43.6 million, and total assets were $66.0 million.
In May 2026, Rein completed an underwritten common stock offering of 57.5 million shares at $1.00 per share, raising gross proceeds of $57.5 million and net proceeds of approximately $53.1 million. Management states that available cash, cash equivalents and investments are expected to fund planned operations, including completion of the Phase 2 RENEW trial, into the first quarter of 2028. The company has an accumulated deficit of $413.5 million and continues to expect operating losses for the foreseeable future.
Positive
- None.
Negative
- None.
Key Figures
Key Terms
Series X Non-Voting Convertible Preferred Stock financial
Pre-Funded Warrants financial
original issue discount financial
at the market offering regulatory
fair value option financial
warrant liabilities financial
Earnings Snapshot
FAQ
What were Rein Therapeutics (RNTX) net losses for Q2 and the first half of 2026?
How much cash and investments does Rein Therapeutics (RNTX) have and what is the cash runway?
What is the status of Rein Therapeutics’ (RNTX) LTI-03 clinical program?
What financing did Rein Therapeutics (RNTX) complete in May 2026?
How many Rein Therapeutics (RNTX) shares are outstanding and what other equity overhang exists?
What is the status of Rein Therapeutics’ (RNTX) LTI-01 program?
AI-generated analysis. How Rhea-AI works. Not financial advice.
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:
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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The |
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, 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.
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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 12, 2026, the registrant had
Table of Contents
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Page |
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PART I. |
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FINANCIAL INFORMATION |
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4 |
Item 1. |
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Financial Statements (Unaudited) |
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4 |
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Condensed Consolidated Balance Sheets |
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4 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
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Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity |
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Condensed Consolidated Statements of Cash Flows |
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Notes to Condensed Consolidated Financial Statements |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
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Controls and Procedures |
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PART II. |
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OTHER INFORMATION |
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Item 1A. |
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Risk Factors |
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Item 5. |
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Other Information |
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Item 6. |
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Exhibits |
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Signatures |
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1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Quarterly Report on Form 10-Q of Rein Therapeutics, Inc. (“Rein,” “we,” “us,” “our,” or the “Company”) contains forward-looking statements that 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 strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
These forward-looking statements include, among other things, statements about:
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in our Annual Report on Form 10-K, or the Annual Report, filed with the SEC on March 26, 2026 and subsequently filed reports, particularly in the “Risk Factors” section, which could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or enter into.
You should read this Quarterly Report and the documents that we reference herein and have filed or incorporated by reference hereto completely and with the understanding that our actual future results may be materially different from what we expect. We do not
2
assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
This Quarterly Report on Form 10-Q includes or incorporates by reference statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information.
Effective on January 10, 2025, we amended our Restated Certificate of Incorporation, as amended, to effect a change in our name from “Aileron Therapeutics, Inc.” to “Rein Therapeutics, Inc.” Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we,” “us,” “our” and the “Company” refer to Rein Therapeutics, Inc. and its wholly owned subsidiaries.
3
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
REIN THERAPEUTICS, INC.
Condensed Consolidated BALANCE SHEETS
(UNAUDITED)
(In thousands, except share and per share data)
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June 30, |
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December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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Short-term investments |
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Prepaid expenses and other current assets |
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Total current assets |
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Goodwill |
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Intangible assets |
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Long-term investments |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities, Convertible Preferred Stock and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Warrant liabilities |
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Total current liabilities |
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Deferred tax liability |
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Total liabilities |
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Commitments and contingencies (Note 13) |
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Convertible preferred stock, $ |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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Accumulated deficit |
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( |
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( |
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Total liabilities, convertible preferred stock and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
REIN THERAPEUTICS, INC.
Condensed Consolidated STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
(In thousands, except share and per share data)
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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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Revenue |
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$ |
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$ |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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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 (expense) income, net |
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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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Net loss per share—basic and diluted |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Weighted average common shares outstanding—basic and diluted |
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Comprehensive loss: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Other comprehensive loss: |
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Unrealized (loss) gain on investments, net of tax of $ |
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( |
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( |
) |
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( |
) |
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Foreign currency translation adjustments |
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( |
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Total other comprehensive loss |
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( |
) |
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( |
) |
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( |
) |
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( |
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Total comprehensive loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
REIN THERAPEUTICS, INC.
Condensed Consolidated STATEMENT OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In thousands, except share data)
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Series X Non-Voting Convertible Preferred Stock |
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Common Stock |
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Total Convertible |
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Shares |
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Amount |
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Shares |
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Amount |
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Additional |
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Accumulated |
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Accumulated |
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Preferred Stock and Stockholders’ |
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Balances at December 31, 2025 |
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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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Issuance of common stock, net of offering costs |
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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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— |
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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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— |
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( |
) |
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( |
) |
Balances at March 31, 2026 |
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$ |
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
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$ |
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||||||
Issuance of common stock, net of offering costs |
|
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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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||
Unrealized loss on investments |
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— |
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— |
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— |
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— |
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— |
|
|
|
( |
) |
|
|
— |
|
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|
( |
) |
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
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|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
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|
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— |
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||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balances at June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
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||||||||
Balances at December 31, 2024 |
|
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$ |
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|
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Issuance of common stock, net of offering costs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
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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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Exercise of stock options |
|
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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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|
Unrealized loss on investments |
|
|
— |
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|
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— |
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|
|
— |
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|
— |
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|
|
— |
|
|
|
( |
) |
|
|
— |
|
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|
( |
) |
Foreign currency translation adjustments |
|
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— |
|
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— |
|
|
|
— |
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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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|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balances at March 31, 2025 |
|
|
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|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Issuance of common stock, net of offering costs |
|
|
— |
|
|
|
— |
|
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|
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|
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|
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— |
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— |
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Issuance of warrants |
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— |
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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 in connection with warrant exercises |
|
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— |
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— |
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— |
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— |
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||||
Warrant exchanges |
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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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Common Stock to be Issued upon exercises of warrants |
|
|
— |
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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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||
Exercise of stock options |
|
|
— |
|
|
|
— |
|
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|
( |
) |
|
|
— |
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— |
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— |
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||
Common stock issuance cost |
|
|
— |
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— |
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|
— |
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— |
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|
|
( |
) |
|
|
— |
|
|
|
— |
|
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|
( |
) |
Unrealized gain on investments |
|
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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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Foreign currency translation adjustments |
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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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( |
) |
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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|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balances at June 30, 2025 |
|
|
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|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
REIN THERAPEUTICS, INC.
Condensed Consolidated STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
|
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Six Months Ended June 30, |
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|||||
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2026 |
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2025 |
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Cash flows from operating activities: |
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|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization expense |
|
|
|
|
|
|
||
Net amortization of discount on notes payable |
|
|
|
|
|
|
||
Non-cash warrant issuance cost |
|
|
|
|
|
|
||
Changes in fair value of warrant liabilities |
|
|
|
|
|
|
||
Accretion of discount on investments |
|
|
( |
) |
|
|
|
|
Stock-based compensation expense |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
( |
) |
|
Other assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
|
||
Accrued expenses and other current liabilities |
|
|
( |
) |
|
|
( |
) |
Other long-term liabilities |
|
|
|
|
|
( |
) |
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of short-term investments |
|
|
( |
) |
|
|
|
|
Purchases of long-term investments |
|
|
( |
) |
|
|
|
|
Net cash used in investing activities |
|
|
( |
) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
||
Proceeds from issuance of common stock, net of offering costs |
|
|
|
|
|
|
||
Proceeds from notes payable |
|
|
|
|
|
|
||
Repayment of notes payable |
|
|
( |
) |
|
|
|
|
Proceeds from issuance of common stock in connection with stock option exercises |
|
|
|
|
|
|
||
Proceeds from issuance of common stock in connection with warrant exercises |
|
|
|
|
|
|
||
Proceeds from issuance of warrants, net of offering costs |
|
|
|
|
|
|
||
Proceeds from warrant exchanges, net of offering costs |
|
|
|
|
|
|
||
Proceeds from warrant exercises with common stock subscribed |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
||
Unrealized loss on investments |
|
$ |
( |
) |
|
$ |
( |
) |
Foreign currency translation adjustments |
|
$ |
|
|
$ |
|
||
Initial recognition of warrant liability |
|
$ |
|
|
$ |
|
||
Allocate net value of warrants issued in connection with the May 2026 Offering |
|
$ |
( |
) |
|
$ |
|
|
Warrant issuance cost recognized as expense |
|
$ |
( |
) |
|
$ |
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
REIN THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in thousands, except share and per share data)
1. Nature of the Business
Rein Therapeutics, Inc. (“Company”) is a Delaware corporation formed in August 2001 under the name Renegade Therapeutics, Inc. In February 2007, the Company changed its name to Aileron Therapeutics, Inc. and in January 2025 changed its name to Rein Therapeutics, Inc. The Company is a clinical stage biopharmaceutical company focused on developing novel therapies for the treatment of fibrosis indications with no approved or limited effective treatments. The Company currently has one product candidate in clinical development, LTI-03.
The Company is a clinical-stage biotechnology company subject to significant risks and uncertainties, including the need for substantial additional financing, reliance on third parties, clinical trial risks, dependence on key personnel, protection of proprietary technology, and compliance with regulatory requirements. Its lead product candidate, LTI-03, is being developed for the treatment of idiopathic pulmonary fibrosis (IPF) and has completed Phase 1a and Phase 1b clinical trials; the Company is currently conducting the Phase 2 RENEW trial, a multi-center, randomized, double-blind, placebo-controlled study expected to enroll approximately
Liquidity
In May 2026, the Company completed an underwritten public offering of
Management believes that, based on the Company’s current operating plan, the Company’s cash, cash equivalents and investments of $
Since its inception, the Company has not generated any revenue from product sales and has never generated an operating profit. The Company has incurred significant losses on an aggregate basis. The Company’s net losses were $
The Company could use its available capital resources sooner than it currently expects. The Company’s future viability is dependent on its ability to raise additional capital, enter into a financing, consummate a successful acquisition, merger, business combination, or a sale of assets or other transaction. If the Company becomes unable to continue as a going concern, it may have to liquidate its assets and the values it receives for its assets in liquidation or dissolution could be significantly lower than the values reflected in its consolidated financial statements.
2. Summary of Significant Accounting Policies
Basis of Presentation
Principles of Consolidation
8
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual for research and development expenses, the prepaid research and development expenses, valuation of intangibles and goodwill, the valuation of warrants, and the value of stock-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
Foreign Currency Transactions
The functional currency for the Company’s wholly owned foreign subsidiary, Lung Therapeutics Australia Pty Ltd., is the United States dollar. All foreign currency transaction gains and losses are recognized in the consolidated statements of operations and comprehensive loss.
Unaudited Interim Financial Information
The accompanying unaudited condensed consolidated financial statements as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025 have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission, or the SEC, for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report for the year ended December 31, 2025 that was filed with the SEC on March 26, 2026 (the “Annual Report”).
The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2026, the results of its operations for the three and six months ended June 30, 2026 and 2025 and its cash flows for the six months ended June 30, 2026 and 2025. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2026 and 2025 are unaudited. The results for the six months ended June 30, 2026 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. The accompanying balance sheet as of December 31, 2025 has been derived from the Company’s audited consolidated financial statements for the year ended December 31, 2025 included in the Company’s Annual Report.
Summary of Significant Accounting Policies
Cash and Cash Equivalents
The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at the acquisition date to be cash equivalents. The Company’s cash equivalents are comprised of funds held in money market accounts and treasury bills account and are measured at fair value on a recurring basis.
Investments
Short-term and Long-term investments consist of U.S. government securities and certificates of deposit. The Company classifies its investments in securities as available-for-sale because, for accounting purposes, they are not considered to be either held-to-maturity securities or trading securities, as the sale of such securities may be required prior to maturity. They are not considered trading securities because they were not acquired with the intent of selling them within hours or days. The Company determines the appropriate classification of the investments at the time they are acquired and evaluates the appropriateness of such classifications at each balance sheet date. The Company classifies investments as short-term if they are available for use in current operations and have maturies of less than one year. The Company classifies investments with remaining maturities of one year or longer as long-term. Investments are carried at fair value with the unrealized gains and losses included in accumulated other comprehensive loss as a component of stockholders’ equity until realized. Realized gains and losses are determined using the specific identification method and are included in other expense, net. The Company regularly reviews its investments for declines in fair value below the amortized cost basis to determine whether the impairment, if any, is due to credit-related or other factors. This review includes the credit worthiness of the security issuers, the severity of the unrealized losses, whether the Company has the intent to sell the securities and whether it is more likely than not that the Company will be required to sell the securities before the recovery of the amortized cost basis. Unrealized gains and losses on available-for-sale debt securities are reported as a component of accumulated comprehensive loss, with the exception of unrealized losses believed to be related to credit losses, if any, which are recognized in earnings in the period the impairment occurs. Impairment assessments are made at the individual security level each reporting period. When the fair value of an available-for-sale debt investment is less than its cost at the balance sheet date, a determination is made as to whether the impairment is related to a credit
9
loss and, if it is, the portion of the impairment relating to credit loss is recorded as an allowance through net income. There were no impairments related to credit losses during any of the periods presented.
Fair value Measurements
Certain assets and liabilities are carried at fair value under GAAP. ASC 820, Fair Value Measurement, or ASC 820, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable.
To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The Company’s cash equivalents consist of investments in U.S. government securities and money market funds stated at carrying value, which approximates fair value and is based on quoted prices in active markets for identical securities. The Company classifies its investments in U.S. government securities as level 1 assets as these assets have been valued based on quoted prices for identical instruments in active markets and certificates of deposit as Level 2 assets as these assets are not traded in an active market and have been valued through a third-party pricing service based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or model-driven valuations whose inputs are observable or whose significant value drivers are observable.
The Company’s other significant accounting policies are described in Note 2 to the consolidated financial statements included in the Annual Report.
Accounting Pronouncements Not Yet Adopted
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. The amendments include technical corrections, clarifications, and minor improvements to various Topics within the FASB ASC. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted. Adoption of this guidance is not expected to have a material impact on the Company’s condensed consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments clarify the application of interim reporting guidance, including when Topic 270 applies, and improve the consistency and usefulness of interim disclosures. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities and for interim reporting periods within annual reporting periods beginning after December 15, 2028, for entities other than public business entities. Early adoption is permitted for all entities. The Company is currently assessing the effect of this ASU on its condensed consolidated financial statements and related disclosures.
In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, to clarify the effective date of ASU 2024-03, Income Statement—Reporting Comprehensive Income: Disaggregation of Income Statement Expenses. FASB clarified that all public business entities should initially adopt the disclosure requirements in the ASU 2024-03 in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently assessing the effect of this ASU on its condensed consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses, to enhance the transparency and decision usefulness of financial information presented in the income statement by requiring disaggregated information about certain income statement expense line items. The amendments apply to all public business entities. This ASU is effective for annual periods beginning after December 15, 2026, and interim reporting
10
periods beginning after December 15, 2027. The Company is currently assessing the effect of this ASU on its condensed consolidated financial statements and related disclosures.
3
The following tables present information about the Company’s financial assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values as of June 30, 2026 and December 31, 2025:
|
|
June 30, 2026 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Certificates of deposit |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
U.S. government securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
|
|
December 31, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
U.S. government securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
During the six months ended June 30, 2026 and the year ended December 31, 2025, there were
4. Investments
There were
|
|
June 30, 2026 |
|
|||||||||||||
|
|
Amortized Cost Basis |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
||||
Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Certificates of deposit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
All investments classified as available-for-sale securities held as of June 30, 2026 had contractual maturities of less than two years. There have been no material realized gains or losses on investments classified as available-for-sale securities for the periods presented. Unrealized losses on investments classified as available-for-sale as of June 30, 2026, were not significant and were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
Prepaid research and development |
|
$ |
|
|
$ |
|
||
Other current assets |
|
|
|
|
|
|
||
Total prepaid expenses and other current assets |
|
$ |
|
|
$ |
|
||
6. Goodwill and Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets and goodwill are tested for impairment at least annually. The assessment of recoverability and impairment was performed at the individual indefinite-lived intangible asset level. The Company did
11
raised. In the fourth quarter of 2025, the Company decided to pause development activities related to LTI-01 for an indefinite period and focus on the development of LTI-03. The timing and likelihood of resuming development of LTI-01 are uncertain and contingent on the Company's ability to obtain additional financing and the future success of LTI-03. Therefore, the Company wrote off the total carrying value of the LTI-01 asset and other preclinical programs as of December 31, 2025.
7. Other Assets
Other assets consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
Non-current prepaid research and development |
|
$ |
|
|
$ |
|
||
Other assets |
|
|
|
|
|
|
||
Total other non-current assets |
|
$ |
|
|
$ |
|
||
8. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
External research and development services |
|
$ |
|
|
$ |
|
||
Payroll and payroll-related costs |
|
|
|
|
|
|
||
Professional fees |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total accrued expenses and other current liabilities |
|
$ |
|
|
$ |
|
||
9
In January 2026 and February 2026, the Company entered into securities purchase agreements with certain institutional investors pursuant to which the Company issued the Notes. The Notes had an aggregate principal amount of approximately $
The Company evaluated the Notes under the guidance in ASC 480 and concluded that the Notes should be classified as liabilities, as they represent unconditional obligations to deliver cash and do not meet the criteria for equity classification. The original issue discount was recorded as a debt discount and is being amortized to interest expense over the term of the Notes using the effective interest method. For the three months ended June 30, 2026, the Company recognized approximately $
In May 2026, upon the closing of the May 2026 Offering, the Notes matured and the Company repaid in full all outstanding amounts under the Notes.
10. Preferred Stock
The Company is authorized to issue
At the 2023 annual meeting of stockholders, or the 2023 Annual Meeting, the Company’s stockholders approved the issuance, in accordance with Nasdaq Listing Rule 5635(a), of shares of common stock, upon conversion of the Company’s outstanding Series X Preferred Stock. On March 5, 2024, based upon then existing beneficial ownership limitations,
The Company evaluated the Series X Preferred Stock for liability classification in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity, or ASC 480, and determined that equity treatment was appropriate because the Series X Preferred Stock did not meet the definition of the liability instruments. Specifically, the Series X Preferred Stock is not mandatorily redeemable and does not embody an obligation to buy back the shares outside of the Company’s control in a manner that could require
12
the transfer of assets. The Company determined that the Series X Preferred Stock would be recorded as temporary equity, based on the guidance of ASC 480, given that it is contingently redeemable.
Each share of Series X Preferred Stock is convertible into
The Series X Preferred Stock has the following characteristics:
Voting
Except as otherwise required by law, the Series X Preferred Stock does not have voting rights. However, as long as any shares of Series X Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series X Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the Series X Preferred Stock or alter or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, the Certificate of Incorporation or by-laws of the Company, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series X Preferred Stock, (ii) issue further shares of Series X Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series X Preferred Stock, or (iii) enter into any agreement with respect to any of the foregoing.
Dividends
Holders of Series X Preferred Stock are entitled to receive dividends on shares of Series X Preferred Stock equal, on an as-if-converted-to-common-stock basis, and in the same form as dividends actually paid on shares of the common stock. Such dividends are not cumulative. Since the Company’s inception,
Liquidation, dissolution or winding up
The Series X Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company.
Upon liquidation, dissolution or winding up of the Company, the Series X preferred stockholders shall be entitled to receive an equivalent amount of distributions as would be paid on the common stock underlying the Series X Preferred Stock, determined on an as-converted basis, pari passu with any distributions to the common stock shareholders.
Conversion
The Series X Preferred Stock is convertible into common stock at a rate of
Redemption
Shares of the Series X Preferred Stock are not redeemable at the election of the holder.
Maturity
The Series X Preferred Stock shall be perpetual unless converted.
11. Common Stock
As of June 30, 2026 and December 31, 2025, the Company was authorized to issue
On May 4, 2026, the Company completed an underwritten public offering of
As of June 30, 2026 and December 31, 2025, the Company had
13
In the event of liquidation or dissolution, the holders of the common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock.
Issuance of Common Stock and Warrants
Konik Warrants and Bios Warrants
On April 30, 2026, the Company entered into an underwriting agreement with Konik Capital Partners, LLC (“Konik”), a division of T.R. Winston & Company, LLC, acting as sole book-running manager, relating to the May Offering. In connection with the May Offering, the Company issued to the underwriter or its designees warrants to purchase shares of the Company’s common stock equal to
On April 30, 2026, the Company entered into a letter agreement with Bios Partners, L.P., on behalf of certain Bios entities holding securities of the Company. Pursuant to the letter agreement, the Bios entities agreed to defer the conversion of
In consideration for the agreements and waivers of the Bios entities, the Company agreed to issue warrants to the Bios entities to purchase an aggregate of
The 2026 Warrants are exercisable for cash. If, after the initial exercise date, there is no effective registration statement registering the warrant shares, or the prospectus contained therein is not available for the resale of the warrant shares by the holder, the holder may exercise the 2026 Warrants on a cashless basis. A holder of the 2026 Warrants may not exercise any portion of such warrant to the extent that, after giving effect to such exercise, the holder, together with its affiliates and any other persons acting as a group, would beneficially own more than
The 2026 Warrants include customary adjustment provisions for stock dividends, stock splits, combinations, reclassifications and certain other events. Upon a fundamental transaction, the holders of the 2026 Warrants are entitled, upon subsequent exercise, to receive the same type or form of consideration receivable by holders of the Company’s common stock for the shares underlying the warrants. The 2026 Warrants do not provide the holders with a stated right to require the Company to redeem the warrants for cash at a Black-Scholes value upon a fundamental transaction.
The Company evaluated the 2026 Warrants in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging and determined that the 2026 Warrants are not precluded from equity classification. However, because the Company did not have a sufficient number of authorized and unissued shares of common stock available to settle all of its commitments to issue shares at the time the 2026 Warrants were issued, the 2026 Warrants did not meet all of the conditions for equity classification under ASC 815-40. Accordingly, the Company classified the 2026 Warrants as liabilities at issuance.
The 2026 Warrants were initially recognized at fair value on the issuance date and are remeasured to fair value at each reporting date, with changes in fair value recognized in the statements of operations and comprehensive loss. The Company will continue to classify the 2026 Warrants as liabilities until such time as the 2026 Warrants meet the conditions for equity classification.
The Company allocated the proceeds from the offering first to the 2026 Warrants based on their fair value, with the residual proceeds allocated to the common stock issued in the offering. Issuance costs allocated to the 2026 Warrant liabilities were expensed as incurred. Issuance costs allocated to the common stock were recorded as a reduction to additional paid-in capital.
The fair value of the 2026 Warrant liabilities was determined using a Black-Scholes option-pricing model. The following assumptions were used to estimate the fair value of the 2026 Warrants at issuance and as of June 30, 2026:
14
|
|
June 30, 2026 |
|
|
May 5, 2026 |
|
||
Risk-free interest rate |
|
|
% |
|
|
% |
||
Expected term (in years) |
|
|
|
|
|
|
||
Expected volatility |
|
|
% |
|
|
% |
||
Expected dividend yield |
|
|
% |
|
|
% |
||
Common stock price |
|
$ |
|
|
$ |
|
||
Exercise price — Konik Warrants |
|
$ |
|
|
$ |
|
||
Exercise price — Bios Warrants |
|
$ |
|
|
$ |
|
||
The fair value measurement of the 2026 Warrant liabilities is classified as Level 3 within the fair value hierarchy because it is based on significant inputs not observable in the market.
|
|
Amount |
|
|
Balance at December 31, 2025 |
|
$ |
|
|
Issuance of 2026 Warrant liabilities |
|
|
|
|
Change in fair value of 2026 Warrant liabilities |
|
|
|
|
Balance at June 30, 2026 |
|
$ |
|
|
For the three and six months ended June 30, 2026, the Company recognized a loss of $
The shares underlying the 2026 Warrants are not considered outstanding for purposes of basic net loss per share prior to exercise. The shares underlying the 2026 Warrants were excluded from the calculation of diluted net loss per share for the three and six months ended June 30, 2026, because their effect would have been anti-dilutive.
Wainwright Sales Agreement
On May 15, 2025, the Company entered into the Wainwright Sales Agreement with H.C. Wainwright, as agent and/or principal, pursuant to which the Company could offer and sell shares of its common stock having an aggregate offering price of up to $
Warrant Exercises and Exchanges
On April 21, 2025, the Company entered into privately negotiated letter agreements with certain holders of its outstanding warrants issued on November 2, 2023, or the PIPE Warrants, and May 1, 2024, or the Offering Warrants. Pursuant to these agreements, certain holders agreed to exercise the PIPE Warrants for an aggregate of
Separately, in April 2025, the Company entered into agreements with additional holders of the PIPE Warrants who agreed to surrender warrants representing an aggregate of
As part of the Warrant Exchanges, entities affiliated with Bios Equity Partners, LP (“Bios Partners”) surrendered PIPE Warrants representing an aggregate of
In addition, on April 21, 2025, an entity affiliated with Bios Partners agreed to purchase additional pre-funded warrants to acquire
15
The Company assessed the Pre-Funded Warrants for appropriate classification under U.S. GAAP and determined that they are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to ASC 815, Derivatives and Hedging. The Pre-Funded Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the Pre-Funded Warrants are classified as equity and accounted for as a component of additional paid-in capital at the time of issuance. The Pre-Funded Warrants were initially recognized at their fair value, calculated as the fair value of the underlying common stock less the exercise price of $
The repricing of the PIPE Warrants and the Offering Warrants and issuance of the Exchange Pre-Funded Warrants is considered a modification under the guidance of ASU 2021-04. The modification is consistent with the “Equity Issuance” classification under that guidance as the reason for the modification was to induce the holder to cash exercise their warrants, resulting in the imminent exercise of the PIPE Warrants and the Offering Warrants, which raised equity capital and generated net proceeds for the Company of approximately $
The Offering Warrants
In May 2024, the Company completed the Offering pursuant to which the Company issued and sold
The Company had assessed the Offering Warrants for appropriate equity or liability classification and determined the Offering Warrants are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to ASC 815. The Offering Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the Offering Warrants are classified as equity and accounted for as a component of additional paid-in capital at the time of issuance. The Offering Warrants were initially recognized at their relative fair value in the amount of $
The Offering Warrants to purchase
Prepaid Purchase Agreement
On July 29, 2025, the Company entered into a PPA with Yorkville, pursuant to which the Company may request pre-paid advances of up to $
The Company elected the fair value option under ASC 825, Financial Instruments, or ASC 825, to measure the PPAs at fair value, with changes in fair value recognized in earnings. The initial fair value was determined to be equal to the net proceeds received ($
16
Under the terms of the PPAs, the Company issued shares of common stock to Yorkville in satisfaction of the advances. The number of shares issued was determined based on the applicable purchase price per share equal to the lower of (a)
Under the terms of the PPAs, through September 24, 2025, the Company issued an aggregate of
On October 23, 2025, Yorkville purchased a third PPA of $
The initial, the second and the third PPAs were fully settled as of December 31, 2025, with
On December 11, 2025, the Company terminated the PPA.
As of June 30, 2026, there were:
Accordingly, as of June 30, 2026, there were
12. Stock-Based Awards
As of June 30, 2026, the Company had
As of June 30, 2026, the Company had
17
available for future awards under the 2006 Plan, the 2016 Plan, and the 2017 Plan as of June 30, 2026. Shares that are expired, terminated, surrendered or canceled without having been fully exercised under the 2017 Plan will be available for future awards under the 2021 Plan. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards under the 2021 Plan.
Under the 2021 Plan, shares that are expired, terminated, surrendered or canceled without having been fully exercised will be available for future awards. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards.
The exercise price for stock options granted may not be less than the fair market value of the common stock as of the date of grant.
2021 Stock Incentive Plan
The Company’s 2021 Plan was approved by the Company’s stockholders on June 15, 2021 and became effective on June 16, 2021. At the 2023 Annual Meeting, the stockholders of the Company approved an amendment, or the Plan Amendment, to the 2021 Plan to increase the number of shares of common stock issuable under the 2021 Plan by
Under the 2021 Plan, the Company may grant incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, awards of restricted stock units and other stock-based awards. The Company’s employees, officers, directors, consultants and advisors are eligible to receive awards under the 2021 Plan; however, incentive stock options may only be granted to employees. The 2021 Plan is administered by the Board or, at the discretion of the Board, by a committee of the Board. The number of shares of common stock covered by options and the date those options become exercisable, type of options to be granted, exercise prices, vesting and other restrictions are determined at the discretion of the Board, or its committee if so delegated.
Stock options granted under the 2021 Plan with service-based vesting conditions generally vest over
The total number of shares of common stock that may be issued under the 2021 Plan was
2013 Stock Incentive Plan
The Company assumed the 2013 Plan as a result of the Lung Acquisition. In October 2013, Lung’s Board of Directors, or the Lung Board, approved the 2013 Plan to provide long-term incentives for its employees, non-employee directors and certain consultants. As of June 30, 2026,
Before the Lung Acquisition, the 2013 Plan was administered by the Lung Board or, at the discretion of the Lung Board, by a committee of the Lung Board. The exercise prices, vesting and other restrictions were determined at the discretion of the Lung Board, or its committee if so delegated, except that the exercise price per share of stock options may not be less than
Stock Option Valuation
There were
|
|
Six Months Ended June 30, |
|
|
|
|
2026 |
|
|
Risk-free interest rate |
|
|
% |
|
Expected term (in years) |
|
|
|
|
Expected volatility |
|
|
% |
|
Expected dividend rate |
|
|
% |
|
18
Stock Options
The following table summarizes the Company’s stock option activity since January 1, 2026:
|
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
Outstanding at January 1, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Exercised |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Forfeited/Canceled |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Expired |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Outstanding at June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Options exercisable at June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options vested and expected to vest at June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options exercisable at December 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options vested and expected to vest at December 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
There were
The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. There were
Restricted Stock Units
The Company has granted restricted stock units with service-based vesting conditions. Unvested shares of restricted common stock may not be sold or transferred by the holder.
In August 2025, the Company granted
Stock-Based Compensation
The Company recorded stock-based compensation expense related to stock options and restricted stock units in the following expense categories of its statements of operations and comprehensive loss:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Research and development expenses |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation expense |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of June 30, 2026, the Company had an aggregate of $
13. Net Loss per Share
Basic and diluted net loss per share attributable to common stockholders was calculated as follows:
19
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding—basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share attributable to common stockholders—basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
As part of the April 2025 Transactions, the Pre-Funded Warrants to purchase an aggregate of
The Company’s potential dilutive securities, which include stock options as of June 30, 2026 and 2025, have been excluded from the computation of diluted net loss per share attributable to common stockholders whenever the effect of including them would be to reduce the net loss per share. In periods where there is a net loss, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The following potential shares of common stock, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:
|
|
Six Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Options to purchase common stock |
|
|
|
|
|
|
||
Warrants to issue shares of common stock |
|
|
|
|
|
|
||
Series X Preferred Stock issued and outstanding, as converted |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
14. Related Party Transactions
On April 30, 2026, the Company entered into a letter agreement with Bios Partners, L.P., on behalf of certain Bios entities holding securities of the Company. Pursuant to the letter agreement, the Bios entities agreed to defer the conversion of
In consideration for the agreements and waivers of the Bios entities, the Company issued warrants to the Bios entities to purchase an aggregate of
15. Commitments and Contingencies
Legal Proceedings
The Company may from time to time be party to litigation arising in the ordinary course of business. As of June 30, 2026, the Company was not party to any legal proceedings and no material legal proceedings are currently pending or, to the best of the Company’s knowledge, threatened.
Intellectual Property Licenses
Harvard and Dana-Farber Agreement
In August 2006, the Company entered into an exclusive license agreement with President and Fellows of Harvard College, or Harvard, and Dana-Farber Cancer Institute, or DFCI. The agreement granted the Company an exclusive worldwide license, with the right to sublicense, under specified patents and patent applications to develop, obtain regulatory approval for and commercialize specified product candidates based on cell-permeating peptides. Under the agreement, the Company is obligated to use commercially reasonable efforts to develop and commercialize one or more licensed products and to achieve specified milestone events by specified dates. In connection with entering into the agreement, the Company paid an upfront license fee and issued to Harvard and DFCI shares of its common stock.
In February 2010, the agreement was amended and restated, or the Harvard/DFCI agreement, under which additional patent rights were added to the scope of the license agreement and the annual license maintenance fees were increased. Under the Harvard/DFCI
20
agreement, the Company is obligated to make aggregate milestones payments of up to $
The Harvard/DFCI agreement requires the Company to pay annual license maintenance fees of $
As of June 30, 2026, the Company had not developed a commercial product using the licensed technologies and no royalties under the agreement had been paid or were due.
Under the Harvard/DFCI agreement, the Company is responsible for all patent expenses related to the prosecution and maintenance of the licensed patents and applications in-licensed under the agreement as well as cost reimbursement of amounts incurred for all documented patent-related expenses. The agreement will expire on a product-by-product and country-by-country basis upon the last to expire of any valid patent claim pertaining to licensed products covered under the agreement. The Company incurred $
Agreement with the University of Texas Health Science Center at Tyler
In June 2013, the Company entered into a patent and technology license agreement with UT System, on behalf of UTHSCT. The patent and technology license agreement with UT System, or the UTHSCT Agreement, provides the Company access to patents and technology related to the development of LTI-01 and LTI-03. As part of the UTHSCT Agreement, the Company has (i) a royalty-bearing, exclusive license under the patent rights to manufacture, distribute, and sell certain intellectual property; (ii) a non-exclusive license under the technology rights to manufacture, distribute and sell the licensed product; and (iii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the UTHSCT Agreement. In December 2013, the UTHSCT Agreement was amended and restated to include certain patents in all fields worldwide. In May 2017, the UTHSCT Agreement was amended and restated to modify the specific milestone criteria.
In consideration of the UTHSCT Agreement, the Company agreed to pay past and ongoing patent expenses, and the Company owes UTHSCT sublicensing fees, assignment fees, and single digit royalties on worldwide net product sales, with fixed minimum royalty payments that started in 2015.
Pursuant to the UTHSCT Agreement, the Company is required to use diligent efforts to commercialize the licensed technology as soon as commercially practicable, including maintaining active research and development, regulatory, marketing and sales program, all as commercially reasonable.
The Company may terminate the UTHSCT Agreement for convenience with 90 days’ notice. UTHSCT may also terminate the UTHSCT Agreement, but only if the Company breaches the terms of the agreement. The Company did not incur any expense under the UTHSCT Agreement in the six months ended June 30, 2026 and 2025.
Agreement with the University of Texas at Austin
In May 2015, the Company entered into a patent license agreement with UT Austin on behalf of UT System. This license agreement with UT Austin, or the UT Austin 6607 Agreement, relates to the patent rights to polypeptide therapeutics and uses thereof. Pursuant to the UT Austin 6607 Agreement the Company has (i) a royalty-bearing, exclusive license under the patent rights to manufacture, distribute, and sell the licensed product; and (ii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement. The UT Austin 6607 Agreement was amended and restated in January 2017, November 2018, and June 2019. The amendments related to extension of milestone payment dates and specific terminology around the milestone achievement criteria.
In consideration of the UT Austin 6607 Agreement, the Company agreed to pay past and ongoing patent expenses, milestone fees upon certain development and regulatory milestone events, annual license fees, tiered sublicense fees, assignment fees, low single digit royalties on net sales and a Food and Drug Administration, or FDA, Priority Review Voucher fee if the Company sells or transfers this voucher.
Pursuant to the UT Austin 6607 Agreement, the Company is required to use diligent efforts to commercialize the licensed products, including maintaining active research and development, regulatory, marketing and sales program. Moreover, the Company is required to meet certain development and regulatory milestones by specific dates.
21
The Company may terminate the UT Austin 6607 Agreement for convenience with 90 days’ notice. UT Austin may also terminate the UT Austin 6607 Agreement, but only if the Company breaches the terms of the agreement. The Company did not incur any expense under the UT Austin 6607 Agreement in the six months ended June 30, 2026 and 2025.
Agreement with Medical University of South Carolina
In March 2016, the Company entered into a license agreement with Medical University of South Carolina Foundation for Research Development, or MUSC. Pursuant to this license agreement with MUSC, or the MUSC Agreement, the Company has patent rights related to protecting against lung fibrosis by up regulating Cav1. The MUSC Agreement granted (i) a royalty-bearing, exclusive license under the patent rights to make, use and sell the license product; and (ii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement. In September 2018, the agreement was amended and restated to include definitions of related methods, related products and related rights.
In consideration of the MUSC Agreement, the Company agreed to pay a non-refundable license fee, patent expenses, milestone fees upon certain development, regulatory and commercial milestone events, sublicense fees, assignment fees and low single digit royalties on net sales, with a fixed minimum royalty payment starting in 2019 and a transaction fee upon the Company’s liquidation.
Pursuant to the MUSC Agreement, the Company is required to use diligent efforts to develop, manufacture and sell the licensed products.
The Company may terminate the MUSC Agreement for convenience by providing a written notice to MUSC effective 90 days following the receipt of notice, and either party may terminate the agreement for a breach of contract. The Company did
Agreement with Vivarta Therapeutics LLC
In March 2018, the Company entered into a license agreement with Vivarta Therapeutics, LLC, or Vivarta. This license agreement with Vivarta, or the Vivarta Agreement, relates to intellectual property relating to epithelial sodium channel inhibitors and methods to treat pulmonary disease. Pursuant to the Vivarta Agreement the Company has (i) a royalty-bearing, exclusive license under the intellectual property rights to make, use and sell the licensed product, and (ii) a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to use the licensed product in the field of use and approved territories outlined in the agreement.
In consideration for the Vivarta Agreement, the Company agreed to grant Vivarta a warrant to purchase an aggregate of
Pursuant to the Vivarta Agreement, the Company is required to use diligent efforts to develop, manufacture and sell the licensed products.
The Company may terminate the Vivarta Agreement for convenience by providing a written notice to Vivarta effective 90 days following the receipt of notice, and either party may terminate the agreement for a breach of contract. The Company did not incur any expenses under the Vivarta Agreement in the six months ended June 30, 2026 and 2025.
Letter Agreement with Rients
In August 2025, the Company entered into a letter agreement with Rients for Rients to evaluate the legacy ALRN-6924 compound, or the Compound Asset. During the term of the letter agreement, Rients shall pay the Company for all fees and expenses incurred by the Company to maintain the Compound Asset.
The letter agreement was terminated in May 2026.
Project Addendum
In December 2025, the Company entered into a project addendum with a third party Contract Research Organization, or CRO, for the purposes of setting forth the responsibilities and obligations of the parties in regards to conducting a certain clinical research program entitled “A Phase 2, Randomized, Double-Blind, Placebo-Controlled Study of the Safety, Tolerability and Efficacy of Caveolin-1-Scaffolding-Protein-Derived Peptide in Patients with IPF” under the Company’s Protocol LTI-03-2001. Pursuant to the project addendum and the contract modification signed in July 2026, the Company has contracted to receive up to $
Indemnification Agreements
In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into
22
indemnification agreements with members of its board of directors and officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. As of the date of this report, the Company has not incurred any material costs or claims as a result of such indemnifications.
16. Segment Reporting
The Company has one reportable segment which focuses on developing novel therapies for the treatment of orphan pulmonary and fibrosis indications with no approved or limited effective treatments. The Company’s CODM, the CEO, manages the Company’s operations on a consolidated basis as one operating segment for the purposes of evaluating financial performance and allocating resources.
The Company has not generated any revenue yet. The CODM assesses the financial performance of the segment and decides how to allocate resources based on net loss on a consolidated basis. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.
The CODM uses net loss predominantly in the annual operating budget and in the strategic planning and forecasting process. Such loss measure is used to monitor budget versus actual results on an ongoing basis by the CODM and determine how resources are allocated to the various activities of the Company. The CODM also uses net loss to evaluate the Company’s performance and assist in determination of management’s incentive compensation.
All of the Company’s tangible assets are held in the United States. The Company views its operations and manages its business in one operating segment operating exclusively in the United States.
The table below is a summary of the segment loss, including significant segment expenses:
|
|
Three Months Ended |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Research and development expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
LTI-01 program-related expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
CMC activities |
|
|
|
|
|
|
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|
|
|
|
|
||||
Clinical operation activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total LTI-01 program-related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
LTI-03 program-related expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preclinical study costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
CMC activities |
|
|
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|
|
|
|
|
|
|
|
|
||||
Clinical operation activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total LTI-03 program-related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other program-related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Employee related expenses |
|
|
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|
|
|
|
|
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|
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|
||||
Professional fees for services |
|
|
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|
|
|
|
|
|
|
|
|
||||
Facilities and other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total research and development expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expenses: |
|
|
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|
|
|
|
|
|
|
|
|
||||
Employee related expenses |
|
|
|
|
|
|
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|
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|
||||
Professional fees for services |
|
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|
|
|
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|
|
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|
||||
Facilities and other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total general and administrative expenses |
|
|
|
|
|
|
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|
|
|
|
||||
Other income |
|
|
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|
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|
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|
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|
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|
||||
Other expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Segment and consolidated net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
17. Subsequent Event
On July 20, 2026, the Company held its 2026 Annual Meeting of Stockholders, which approved an amendment to its restated certificate of incorporation to increase the number of authorized shares of common stock from
On August 3, 2026, the Compensation Committee of the Board of Directors approved the grant of
23
to receive one share of the Company's common stock upon settlement. The restricted stock units were settled on
The Company evaluated subsequent events through the date of filing of this Quarterly Report on Form 10-Q and determined that no other events have occurred that would require adjustment to or disclosure in the unaudited condensed financial statements.
24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis are meant to provide material information relevant to an assessment of the financial condition and results of operations of our Company, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources, so as to allow investors to better view our Company from management’s perspective. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements for the quarter ended June 30, 2026, included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under Item 1A. "Risk Factors" in the Company’s Annual Report for the fiscal year ended December 31, 2025 filed with the SEC on March 26, 2026 (the “Annual Report”).
Overview and Recent Developments
We are a clinical stage biopharmaceutical company focused on developing novel therapies for the treatment of orphan pulmonary and fibrosis indications with no approved or limited effective treatments. We currently have one lead product candidate in clinical development, LTI-03. Our pipeline includes:
In the fourth quarter of 2025, we decided to pause development activities related to LTI-01 for an indefinite period.
In May 2025, we initiated screening and recruitment of patients in the RENEW Phase 2 clinical trial of LTI-03. The RENEW trial is a Phase 2 multi-center, randomized, double-blind, placebo-controlled study evaluating the safety, tolerability, and efficacy of LTI-03 patients with IPF. In addition, the trial is designed to assess the activity of inhaled dry powder LTI-03 across multiple biomarkers and to measure lung function and the potential for healthy tissue regeneration. The trial is designed to enroll approximately 120 patients diagnosed with IPF within 5 years of screening, who may be receiving standard of care antifibrotic therapy, across up to 50 sites globally, including sites in the United States, United Kingdom, Germany, Australia and Poland. Patients will be randomized into two blinded placebo-controlled cohorts that will run concurrently. Patients in the low dose cohort will receive 2.5 mg of either LTI-03 or placebo administered twice daily, or BID, for a total dose of 5 mg/day, while participants in the high dose cohort will receive 5 mg BID for a total dose of 10 mg/day. The primary endpoint is the incidence of treatment-emergent adverse events from Day 1 through Week 24. The key secondary endpoint is the efficacy of LTI-03 measured through forced vital capacity, percent predicted FVC and high-resolution computer tomography, in collaboration with Qureight Ltd. Patients will undergo a 28-day screening period prior to being randomized and entering the 24-week treatment period, with a four-week follow-up.
In October 2025, we received authorization from the European Medicines Agency, or the EMA, to initiate our Phase 2 RENEW trial of our lead candidate, LTI-03, at sites in Germany and Poland. We had previously received regulatory clearance from the U.K.’s Medicines and Healthcare products Regulatory Agency, or the MHRA. In January 2026, we received orphan drug designation from the EMA for LTI-03.
As of the date of this Quarterly Report, we activated sites and are seeking to enroll patients in all countries in the trial. In March 2026, we dosed our first patient in the RENEW Phase 2 clinical trial of LTI-03. We expect to report initial interim data on some proportion of patients in the fourth quarter of 2026.
We have not completed the development of any of our product candidates, have not generated any revenue from product sales and have never generated an operating profit.
In May 2026, we completed an underwritten public offering of 57,500,000 shares of our common stock at a public offering price of $1.00 per share, or the May 2026 Offering. Aggregate gross proceeds from the May 2026 Offering were approximately $57.5 million, and net proceeds to the Company were approximately $53.1 million after deducting underwriting discounts, commissions, and offering expenses of approximately $4.4 million. As of June 30, 2026, we had $43.6 million in cash, cash equivalents and investments.
Since our inception, we have incurred significant losses on an aggregate basis. Our net losses were $6.4 million and $6.8 million for the three months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $413.5 million. These losses have resulted primarily from costs incurred in connection with research and development activities, licensing and patent
25
investment and general and administrative costs associated with our operations as well as the impairment loss on intangible assets. We expect to continue to incur operating losses for the foreseeable future.
As of June 30, 2026, we had cash, cash equivalents and investments of $43.6 million. Based on our current operating plan, we believe that our existing cash, cash equivalents and investments as of June 30, 2026 will be sufficient to enable us to fund our planned operating expense and capital expenditure requirements into the first quarter of 2028. We also believe the funds will be sufficient to enable us to complete the Phase 2 RENEW clinical trial of LTI-03.
Master Services Agreement
In April 2025, we entered into a master services agreement with a third party Contract Research Organization, or CRO, under which the CRO has agreed to perform certain services in accordance with written work orders. The work orders set forth the obligations of the parties with regard to conducting the clinical research study entitled “A Randomized, Double-Blind, Placebo-Controlled, Phase 2, Safety, Tolerability and Efficacy Study of Caveolin1-Scaffolding-Protein-Derived Peptide (LTI-03) in Patients with IPF”, under our Protocol LTI-03-2001. Pursuant to the agreement, we had contracted for up to $17.0 million of master services. In August 2025, this master services agreement was terminated with less than $0.4 million of future commitment for the Company.
In December 2025, we entered into a project addendum with a third party CRO for the purposes of setting forth the responsibilities and obligations of the parties in regards to conducting a certain clinical research program entitled “A Phase 2, Randomized, Double-Blind, Placebo-Controlled Study of the Safety, Tolerability and Efficacy of Caveolin-1-Scaffolding-Protein-Derived Peptide in Patients with IPF” under our Protocol LTI-03-2001. Pursuant to the project addendum and the contract modification signed in July 2026, we have contracted to receive up to $20.8 million of master services as we may request from time to time at our discretion.
Components of Our Results of Operations
Revenue
We have not generated any revenue from product sales and we do not expect to generate any revenue from the sale of products in the foreseeable future.
Operating Expenses
Our expenses since inception have consisted solely of research and development costs, general and administrative, and restructuring costs.
Research and Development Expenses
For the periods presented in this Quarterly Report on Form 10-Q, research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, and include:
We expense research and development costs as incurred. We recognize costs for certain development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors and our clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid or accrued research and development expenses.
26
In addition, we typically use our employee and infrastructure resources across our development programs. We track outsourced development costs and milestone payments made under our licensing arrangements by product candidate or development program, but we do not allocate personnel costs, license payments made under our licensing arrangements or other internal costs to specific development programs or product candidates because these costs are deployed across multiple programs and, as such, are not separately classified.
Research and development activities are central to our business model. The duration, costs and timing of clinical trials and development of a product candidate will depend on a variety of factors, including:
A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA, or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipated would be required for the completion of clinical development of a product candidate, or if we experience significant trial delays due to patient enrollment or other reasons, we could be required to expend significant additional financial resources and time on the completion of clinical development.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance and corporate and administrative functions. General and administrative expenses are comprised of professional fees associated with being a public company including costs of accounting, auditing, legal, regulatory, tax and consulting services associated with maintaining compliance with exchange listing and the SEC requirements, director and officer insurance costs; and both public and investor relations costs. General and administrative expenses also include legal fees relating to patent and corporate matters; legal and other professional fees relating to our strategic process; other insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.
Other (Expense) Income, net
Interest and Other Income
Interest income consists of interest income earned on our cash, cash equivalents and investments. Historically, our interest income had not been significant due to low investment balances and low interest earned on those balances. We anticipate that our interest income will fluctuate in the future in response to our cash, cash equivalents and investments and the interest rate environment.
Other (expense) income, net consists of the income recognized under the Option Agreement with Advancium, gains or losses recognized from non-routine items such as accretion on short-term investments, and gains or losses recognized from foreign currency transactions, original issue discount, or OID, related to the PPA, the promissory notes, and the disposal of fixed assets.
We anticipate that our interest income and investment accretion will fluctuate in the future in response to our then-current cash, cash equivalents and investments, and then-current interest rates.
27
Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025:
|
|
Three Months Ended June 30, |
|
|
Increase |
|
||||||
|
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
|||
|
|
(in thousands) |
|
|||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
3,638 |
|
|
|
4,292 |
|
|
|
(654 |
) |
General and administrative |
|
|
2,438 |
|
|
|
2,579 |
|
|
|
(141 |
) |
Total operating expenses |
|
|
6,076 |
|
|
|
6,871 |
|
|
|
(795 |
) |
Loss from operations |
|
|
(6,076 |
) |
|
|
(6,871 |
) |
|
|
795 |
|
Other (expense) income, net |
|
|
(299 |
) |
|
|
49 |
|
|
|
(348 |
) |
Net loss |
|
$ |
(6,375 |
) |
|
$ |
(6,822 |
) |
|
$ |
447 |
|
Research and Development Expenses
Research and development expenses for the three months ended June 30, 2026 were $3.6 million, compared to $4.3 million for the three months ended June 30, 2025. Direct research and development services costs decreased $0.7 million as compared to the three months ended June 30, 2025 mainly due to the timing of services provided by the third party CRO.
General and Administrative Expenses
General and administrative expenses were $2.4 million for the three months ended June 30, 2026, compared to $2.6 million for the three months ended June 30, 2025. The decrease of $0.2 million in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily due to decreased employee related expenses of less than $0.1 million as a result of a decrease in stock-based compensation expense, and decreased facilities and other expenses of less than $0.1 million.
Other (Expense) Income, net
Other (expense) income, net of $0.3 million for the three months ended June 30, 2026 primarily consisted of interest expense as a result of the amortization of discount on notes payable related to the promissory notes, offset by interest income in our then-current cash, cash equivalents and investments. We anticipate that our interest income and investment accretion will fluctuate in the future in response to our then-current cash, cash equivalents and investments, and then-current interest rates.
Comparison of the Six Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025:
|
|
Six Months Ended June 30, |
|
|
Increase |
|
||||||
|
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
|||
|
|
(in thousands) |
|
|||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
6,711 |
|
|
|
7,346 |
|
|
|
(635 |
) |
General and administrative |
|
|
4,595 |
|
|
|
5,134 |
|
|
|
(539 |
) |
Total operating expenses |
|
|
11,306 |
|
|
|
12,480 |
|
|
|
(1,174 |
) |
Loss from operations |
|
|
(11,306 |
) |
|
|
(12,480 |
) |
|
|
1,174 |
|
Other (expense) income, net |
|
|
(907 |
) |
|
|
157 |
|
|
|
(1,064 |
) |
Net loss |
|
$ |
(12,213 |
) |
|
$ |
(12,323 |
) |
|
$ |
110 |
|
Research and Development Expenses
Research and development expenses for the six months ended June 30, 2026 were $6.7 million, compared to $7.3 million for the six months ended June 30, 2025. The decrease was primarily due to the timing of services provided by the third party CRO. During the six months ended June 30, 2026, we spent $4.2 million on clinical trials, $1.1 million on manufacturing, $1.0 million on employee and related expenses, $0.3 million on regulatory and development consulting and less than $0.1 million on facilities and other expenses. During the six months ended June 30, 2025, we spent $3.8 million on clinical trials, $1.9 million on manufacturing, and $0.5 million on regulatory and development consulting as well as $1.1 million on employee and related expenses.
General and Administrative Expenses
General and administrative expenses were $4.6 million for the six months ended June 30, 2026, compared to $5.1 million for the six months ended June 30, 2025. The decrease of $0.5 million in the six months ended June 30, 2026 as compared to the
28
six months ended June 30, 2025 was primarily due to decreased professional fees of $0.3 million as a result of a decrease in legal expense and decreased employee and related expenses of $0.2 million as a result of a decrease in stock-based compensation expense.
Other Income, net
Other (expense) income, net of $0.9 million for the six months ended June 30, 2026 primarily consisted of interest expense as a result of the amortization of discount on notes payable related to the promissory notes, offset by interest income in our then-current cash, cash equivalents and investments. Other (expense) income, net for the six months ended June 30, 2025 primarily consisted of interest income and accretion in our then-current cash, cash equivalents and investments.
Liquidity and Capital Resources
Since inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our lead product candidate, LTI-03, or any future product candidates. We expect that our research and development and general and administrative costs will continue to increase significantly, including in connection with conducting clinical trials and manufacturing for our lead product candidates or any future product candidates to support potential future commercialization and providing general and administrative support for our operations, including the costs associated with operating as a public company.
As of June 30, 2026, we had cash, cash equivalents and investments of $43.6 million. Based on our current operating plan, we believe that our existing cash, cash equivalents and investments as of June 30, 2026 will be sufficient to enable us to fund our planned operating expense and capital expenditure requirements into the first quarter of 2028. However, our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully advance the clinical development of LTI-03 or any future product candidates. If we are not able to generate sufficient revenue in a timeframe that satisfies our cash needs, we will need to raise more capital. In the event we require additional capital, we will endeavor to acquire additional funds through various financing sources, including our ATM, follow-on equity offerings, debt financing and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue-producing operations and meaningful commercial success with a smaller amount of capital. If we are unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce costs in order to conserve cash.
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented:
|
|
Six Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Cash used in operating activities |
|
$ |
(12,064 |
) |
|
$ |
(12,593 |
) |
Cash used in investing activities |
|
|
(35,073 |
) |
|
|
— |
|
Cash provided by financing activities |
|
|
52,469 |
|
|
|
5,450 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(5 |
) |
|
|
— |
|
Net increase (decrease) in cash and cash equivalents |
|
$ |
5,327 |
|
|
$ |
(7,143 |
) |
Operating Activities.
During the six months ended June 30, 2026, net cash used in operating activities was $12.1 million primarily due to our net loss of $12.2 million and cash used in the change in operating assets and liabilities of $1.7 million, offset by non-cash charges of $1.8 million. Non-cash charges resulted primarily from non-cash warrant issuance cost of $0.4 million, net amortization of discount on notes payable of $1.1 million and stock-based compensation expense of $0.3 million. Changes in our operating assets and liabilities during the six months ended June 30, 2026 consisted primarily of an increase of $1.7 million in other non-current assets, a decrease of $0.7 million in accrued expenses and other current liabilities, offset by an increase of $0.4 million in accounts payable and a decrease of $0.3 million in prepaid expenses and other current assets.
During the six months ended June 30, 2025, net cash used in operating activities was $12.6 million primarily due to our net loss of $12.3 million and cash used in the change in operating assets and liabilities of $0.8 million, offset by non-cash charges of $0.5 million. Non-cash charges resulted primarily from stock-based compensation expense of $0.5 million. Changes in our operating assets and liabilities during the six months ended June 30, 2025 consisted primarily of a decrease of $3.5 million in other long-term liabilities and accrued expenses and other current liabilities, an increase of $2.3 million in other non-current assets, and an increase of $0.1 million in prepaid expenses and other current assets, offset by an increase of $5.1 million in accounts payable.
Investing Activities.
29
During the six months ended June 30, 2026, net cash used in investing activities was $35.1 million primarily due to our short term investments of $32.1 million and long term investments of $3.0 million. There was no cash used in or provided by investing activities during the six months ended June 30, 2025.
Financing Activities.
During the six months ended June 30, 2026, net cash provided by financing activities was $52.5 million primarily due to the net proceeds from the May 2026 Offering described above, offset by the discount on notes payable that were received and repaid during the six months ended June 30, 2026.
During the six months ended June 30, 2025, net cash provided by financing activities was $5.5 million primarily due to the April 2025 Transactions described above.
Contractual and other obligations
We enter into contracts in the normal course of business with CROs for clinical and preclinical research studies, external manufacturers for product for use in our clinical trials, and other research supplies and other services as part of our operations. These contracts generally provide for termination on notice, and therefore are cancelable contracts.
In December 2025, we entered into a project addendum with a third party CRO for the purposes of setting forth the responsibilities and obligations of the parties in regards to conducting a certain clinical research program entitled “A Phase 2, Randomized, Double-Blind, Placebo-Controlled Study of the Safety, Tolerability and Efficacy of Caveolin-1-Scaffolding-Protein-Derived Peptide in Patients with IPF” under our Protocol LTI-03-2001. Pursuant to the project addendum and the contract modification signed in July 2026, we had contracted for up to $20.8 million of master services.
Critical Accounting Estimates
Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on 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 values of assets and liabilities 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.
During the three and six months ended June 30, 2026, there were no material changes to the items that we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.
Global and Macroeconomic Developments
We are subject to continuing risks and uncertainties in connection with legislative, regulatory, political, geopolitical and macroeconomic developments beyond our control, including inflationary pressures, general economic slowdown or a recession, high interest rates, changes in monetary policy or foreign currency exchange rates, changes in trade policies, including tariffs and other trade restrictions or the threat of such actions, instability in financial institutions, the ongoing conflicts in Ukraine and in the Middle East. Most of these developments and factors are outside of our control and could exist for an extended period of time. We will continue to evaluate the nature and extent of the potential impacts to our business, results of operations, liquidity and capital resources. See the section titled “Risk Factors” found elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report for additional information.
Smaller Reporting Company Status
We are a “smaller reporting company” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250.0 million or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700.0 million. For so long as we continue to be a smaller reporting company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.
Recently Issued Accounting Pronouncements
We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 to our condensed consolidated financial statements to this Quarterly Report on Form 10-Q, such standards will not have a material impact on our condensed consolidated financial statements or do not otherwise apply to our operations.
30
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company, as defined in Rule 12b-2 under the Exchange Act for this reporting period and are not required to provide the information required under this item.
Item 4. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
The term “disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
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 Chief Executive Officer and our interim Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report, 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 Chief Executive Officer and our interim Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of June 30, 2026, because of the identified material weaknesses in our internal control over financial reporting described below.
Material Weaknesses
We identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. We identified the following material weaknesses in internal control over financial reporting: (i) lack of sufficient accounting and supervisory personnel who have the appropriate level of technical accounting experience and training, and (ii) lack of adequate procedures and controls to ensure that accurate financial statements could have been prepared and reviewed on a timely basis for annual reporting purposes. These material weaknesses continued to exist as of June 30, 2026 and December 31, 2025.
Management’s Plan to Remediate Material Weaknesses
The below are actions that we have taken to date to remediate the above-mentioned material weaknesses:
In addition to implementing and executing the aforementioned activities, the following activities are expected to be completed in fiscal year 2026:
31
The material weaknesses will not be considered remediated until management completes the design and implementation of the measures described above and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. Management believes that the remediation measures described above will be implemented in a manner such that the controls can be tested, and the identified material weaknesses can be determined to be remediated, however, no assurance can be made that such remediation will occur or that additional material weaknesses will not be identified.
Changes in Internal Control Over Financial Reporting
Except for the above noted and previously reported material weaknesses and the related ongoing remediation activities described above, no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) has occurred during the three months ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
32
PART II—OTHER INFORMATION
Item 1A. Risk Factors.
For a discussion of our risk factors, see “Part I, Item 1A-Risk Factors” in our Annual Report for the year ended December 31, 2025.
You should carefully consider the risks included in our Annual Report, together with all of the other information in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. The occurrence of any single risk or any combination of risks could materially and adversely affect our business, financial condition, results of operations, cash flows and the trading price of our common stock.
Item 5. Other Information
During the three months ended June 30, 2026, no director or officer of the Company
Item 6. Exhibits.
The following exhibits are filed or furnished as part of this Quarterly Report on Form 10-Q.
Exhibit Number |
|
Description |
|
|
|
3.1 |
|
Restated Certificate of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 11, 2021). |
|
|
|
3.2 |
|
Certificate of Amendment of Restated Certificate of Incorporation of the Registrant, dated as of November 10, 2022 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 10, 2022). |
|
|
|
3.3 |
|
Certificate of Amendment of Restated Certificate of Incorporation of the Registrant, dated February 28, 2024 (incorporated by reference to Exhibit 3.3 of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2024). |
|
|
|
3.4 |
|
Certificate of Amendment to Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 10, 2025). |
|
|
|
3.5 |
|
Certificate of Amendment to Restated Certificate of Incorporation |
|
|
|
3.6 |
|
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 10, 2025). |
|
|
|
31.1 |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2 |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.1 |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2 |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
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 management contract or compensatory plan. |
+ |
In accordance with Item 601(b)(10)(iv) of Regulation S-K, certain information (indicated by “[**]”) has been excluded from this exhibit because it is both not material and private or confidential. A copy of the omitted portion will be furnished to the SEC upon request. |
33
# |
Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC. |
34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
Rein Therapeutics, Inc. |
||
|
|
|
|
|||
Date: August 14, 2026 |
|
|
|
By: |
|
/s/ Brian Windsor, Ph.D. |
|
|
|
|
|
|
Brian Windsor, Ph.D. |
|
|
|
|
|
|
President and Chief Executive Officer (Principal Executive Officer) |
|
|
|
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Date: August 14, 2026 |
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By: |
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/s/ Timothy M. Cunningham |
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Timothy M. Cunningham |
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Interim Chief Financial Officer (Principal Financial Officer) |
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