Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q (this "Quarterly Report") covers (a) a period prior to the closing of the Business Combination (as defined below) and (b) a period subsequent to the closing of the Business Combination. References in this report to "we," "us," "our" or the "Company" refer to Liminatus Pharma, Inc. (successor to Iris Parent Holding Corp.) and its subsidiaries. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

Some of the statements contained in this document may constitute "forward-looking statements" for purposes of the federal securities laws. All statements, other than statements of historical fact included in this report including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the "Risk Factors" section of the Company's final prospectus for its initial public offering filed with the U.S. Securities and Exchange Commission (the "SEC"). The Company's filings with the SEC can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

The Company is a pre-clinical stage biopharmaceutical company developing novel, immune-modulating cancer therapies. The Company's candidate IBA101, is a humanized anti CD47 monoclonal antibody. The next generation CD47 checkpoint inhibitor's initial indication is expected to be patients with advanced solid cancers including non-small cell lung cancer.

The Company is subject to the uncertainty of whether the Company's intellectual property will develop into successful commercial products.

Business Combination

On November 30, 2022, Iris Acquisition Corp, a Delaware corporation ("Iris"), the Company, Liminatus Pharma, LLC, a Delaware limited liability company ("Liminatus"), Liminatus Merger Sub and SPAC Merger Sub entered into a business combination agreement (as it may be amended, supplemented or otherwise modified from time to time, the "Business Combination Agreement").

On March 4, 2025, Iris held a special meeting of stockholders. At the special meeting, Iris's stockholders voted to approve the Business Combination and adopt the Business Combination Agreement, among other items. In connection with the special meeting, stockholders holding 59,844 Iris Class A Shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $11.74 per share, subject to adjustment for taxes payable from the trust account, for an aggregate redemption amount of $702,359. The redemptions were settled on April 30, 2025 upon the consummation of the Business Combination.

On April 30, 2025 (the "Closing Date"), the Company consummated the business combination contemplated by the Business Combination Agreement, pursuant to which (a) Liminatus Merger Sub merged with and into Liminatus (the "Liminatus Merger"), with Liminatus surviving the Liminatus Merger as a direct wholly-owned subsidiary of the Company, and (b) simultaneously with the Liminatus Merger, SPAC Merger Sub merged with and into Iris (the "SPAC Merger" and, together with the Liminatus Merger, the "Mergers"), with Iris surviving the SPAC Merger as a direct wholly-owned subsidiary of the Company (the transactions contemplated by the foregoing clauses (a) and (b) the "Business Combination"), and in connection therewith the Company changed its name from "Iris Parent Holding Corp." to "Liminatus Pharma, Inc."

Pursuant to the Business Combination Agreement, among other matters, at the effective time of the Business Combination (the "Effective Time"), (i) every issued and outstanding security issued by Iris during its initial public offering (each, an "Iris Unit") was automatically separated and broken out into its constituent parts and the holder thereof was deemed to hold one share of Iris Class A

common stock, par value $0.0001 per share (the "Iris Class A Shares") and one-fourth of one redeemable warrant that was included as part of each Iris Unit (the "Public Warrants"), and such underlying constituent securities of Iris were converted in accordance with the applicable terms of the Business Combination Agreement, (ii) at the Effective Time, each issued and outstanding Iris Class A Share was converted automatically into and thereafter represent the right to receive one share of common stock, par value $0.0001 per share ("Common Stock"), of the Company, following which all Iris Class A Shares ceased to be outstanding and were automatically canceled and ceased to exist, (iii) at the Effective Time, each issued and outstanding Public Warrant immediately and automatically represented the right to purchase shares of Common Stock on the same terms and conditions as are set forth in the applicable warrant agreement, (iv) at the Effective Time, each issued and outstanding non-redeemable warrant of Iris that was issued by Iris in a private placement at the time of the consummation of its initial public offering, entitling the holder thereof to purchase one Iris Class A Share at $11.50 per share, except those issued to Cantor Fitzgerald & Co. ("Cantor"), were forfeited, and (v) the private placement warrants issued to Cantor immediately and automatically represented the right to purchase shares of Common Stock.

Upon the consummation of the Business Combination, the Company's certificate of incorporation was amended and restated to, among other things, set the total number of authorized shares of capital to 501,000,000 shares, of which 500,000,000 were designated as common stock, $0.0001 par value per share, and 1,000,000 shares were designated as preferred stock, $0.0001 par value per share.

At the Closing Date, 7,014,633 shares of Iris Class A Shares automatically converted into shares of the Company's common stock, on a one-for-one basis. Of the total 7,014,633 newly converted shares, 6,900,000 were issued to Iris Acquisition Holdings, LLC, the sponsor of Iris and 114,633 were issued to Iris' public stockholders in a noncash transaction.

At the Closing Date, the Company issued an aggregate of 1,500,000 shares of the Company's common stock in a private placement (the "PIPE Shares") for the total consideration of $15,000,000 (the "PIPE Financing"). The PIPE Financing consisted of a cash and non - cash component. Under the cash component, the Company received gross proceeds of $10,556,500, of which $7,129,500 came directly from the PIPE investor and $3,427,000 were funded indirectly by the PIPE investor, through promissory notes between Prophase Sciences, LLC, a related party of the Company, and Liminatus. At the Closing Date, the $3,427,000 in related party debts between Prophase Sciences, LLC and Liminatus was ultimately converted into shares as part of the PIPE Financing. As part of the PIPE Financing, the gross proceeds satisfied principal and accrued interest totaling $3,316,756, which was ultimately converted into shares as part of the PIPE Financing. The non - cash component of the PIPE Financing included the conversion of $4,443,500 in amounts borrowed from a consortium of related parties. The $4,443,500 borrowed from the related parties were used to fund an unsecured promissory note between Liminatus and Iris. At the Closing Date, the unsecured promissory note was settled and the $4,443,500 in related party debts were ultimately converted into shares of the Company in a noncash transaction.

At the Closing Date, 112,222,220 Liminatus' member units converted into 17,500,000 shares of the Company's common stock. Of the 17,500,000 shares of common stock, 4,000,000 were issued to Feelux Co, Ltd. as part of an agreement between the Company, Feelux Co, Ltd. and Car - Tcellkor, Inc. As part of the agreement, the outstanding principal and accrued interest on the Feelux and Car - Tcellkor bonds, totaling $11,481,146, and 9,999,999 member units of Liminatus were converted into 4,000,000 shares of the Company's common stock. The remaining Liminatus member units were converted based on a conversion ratio of 0.1559 shares per member unit.

Upon consummation of the Business Combination, the Company assumed a total of $10,694,604 in liabilities from Iris. The Company incurred $1,518,381 in transaction costs associated with the closing of the Business Combination. The Company converted a total of $14,797,901 of related party debt and accrued interest, $3,316,756 from the PIPE investor and $11,481,146 from Feelux and Car - Tcellkor (as described above) into common stock. Additionally, a total of $169,201 in accrued interest on related party debts that were converted, as discussed above, was eliminated upon consummation of the Business Combination.

In addition, at the Closing Date, the Company settled Iris' liabilities for $7,000,000 of the deferred underwriting fees incurred prior to the Closing Date for 700,000 shares of common stock to the underwriters in Iris's initial public offering. At the Closing Date, the shares were not issued to the underwriter and the Company recorded as a liability with a fair value of $7,049,000. As of June 30, 2025, the shares remained unissued and the value of the Company's liability for the unissued shares is $7,805,000, recorded in Deferred underwriting fee - common stock payable on the accompanying unaudited condensed consolidated balance sheet. On July 1, 2025, the Company issued the shares to the underwriters.

Liminatus was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805"). The determination was primarily based on Liminatus' members prior to the Business Combination having a majority of the voting interests in the combined company, Liminatus' ability to exert control over the majority of the board of directors of the combined company, Liminatus' ability to maintain control of the board of directors on a go-forward basis, Liminatus' senior management comprising the senior management of the combined company, and Liminatus' operations prior to the Business Combination comprise the ongoing operations of the combined company.

Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Liminatus' issuing stock for the net assets of Iris, accompanied by a recapitalization. The net assets of Iris were stated at fair value, with no goodwill or other intangible assets recorded.

Upon the consummation of the Business Combination, the Iris Class A Shares, Iris Units and Public Warrants ceased trading on the OTC Pink Marketplace, and the Common Stock and Public Warrants began trading on The Nasdaq Stock Market ("Nasdaq") under the trading symbols "LIMN" and "LIMNW," respectively, on May 1, 2025.

Results of Operations

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

The following is a comparative of our results of operations for the three months ended June 30, 2025 and 2024:

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Revenue

We did not generate revenue during either of the three months ended June 30, 2025 and 2024. Our ability to generate revenue in the future will depend almost entirely on our ability to successfully develop successful commercial products with our intellectual property.

Operating Expenses

General and Administrative Expenses

General and administrative expenses consists primarily of professional service fees, including accounting and legal services and other general operating expenses. General and administrative expenses increased by $923,127 during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 primarily due to increases in accounting and legal expenses incurred in connection with the Business Combination.

Research and Development Expenses

Research and development expenses consist of costs incurred by Targeted Diagnostics & Therapeutics, Inc. ("TDT") who was performing the research and development activities for the Company in accordance with the license agreements with TDT and the annual fee paid to TDT. Research and development expenses decreased by $714,134 during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 as a result of the termination of TDT's license agreements on August 11, 2024.

Other Income (Expenses), net

The other income (expense), net decreased by $1,283,487 from $51,989 of other expense for the three months ended June 30, 2024 to $1,231,498 of other income for the three months ended June 30, 2025. During the three months ended June 30, 2025, the Company recognized other income of $2,142,297 related to the settlement of TDT's payables and interest income on loans receivable with Iris of $24,383, offset by $62,288 of interest expense on related party promissory notes, an unrealized loss on the change in the fair value of deferred underwriting fee common stock payable of $756,000 and an unrealized loss on the change in fair value of the warrant liabilities of $116,894. In connection with the closing of the Business Combination on April 30, 2025, the loans receivable with Iris were terminated, thus no interest income is expected in future periods.

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

The following is a comparative of our results of operations for the six months ended June 30, 2025 and 2024:

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Revenue

We did not generate revenue during either of the six months ended June 30, 2025 and 2024. Our ability to generate revenue in the future will depend almost entirely on our ability to successfully develop successful commercial products with our intellectual property.

Operating Expenses

General and Administrative Expenses

General and administrative expenses consists primarily of professional service fees, including accounting and legal services and other general operating expenses. General and administrative expenses increased by $1,090,027 during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 primarily due to increases in accounting and legal expenses incurred in connection with the Business Combination.

Research and Development Expenses

Research and development expenses consist of costs incurred by Targeted Diagnostics & Therapeutics, Inc. ("TDT") who was performing the research and development activities for the Company in accordance with the license agreements with TDT and the annual fee paid to TDT. Research and development expenses decreased by $2,328,268 during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 as a result of the termination of TDT's license agreements on August 11, 2024.

Other Income (Expenses), net

The other income (expense), net decreased by $1,263,648 from $95,456 of other expense for the six months ended June 30, 2024 to $1,168,192 of other income for the six months ended June 30, 2025. During the six months ended June 30, 2025, the Company recognized other income of $2,142,297 related to the settlement of TDT's payables and interest income on loans receivable with Iris of $76,589, offset by $177,800 of interest expense on related party promissory notes, an unrealized loss on the change in the fair value of deferred underwriting fee common stock payable of $756,000 and an unrealized loss on the change in fair value of the warrant liabilities of $116,894. In connection with the closing of the Business Combination on April 30, 2025, the loans receivable with Iris were terminated, thus no interest income is expected in future periods.

Liquidity and Capital Resources

The Company is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. Through June 30, 2025, the Company has funded its operations mainly through equity and debt financings, including the proceeds from the Mergers and the PIPE Financing.

As of June 30, 2025, the Company had $1,338,222 of cash in its bank accounts. As of June 30, 2025 and December 31, 2024, there was $1,442,500 and $19,973,000, respectively, of related party debts, which are included in Short-term debt, related parties in the accompanying unaudited condensed consolidated balance sheets.

The Company has incurred operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company has an accumulated deficit of $28,879,455 as of June 30, 2025. The Company had a (loss) from operations and net (loss) of $(1,382,431) and $(214,239), respectively, for the six months ended June 30, 2025. The Company had a (loss) from operations and net income of $(1,118,211) and $113,287, respectively, for the three months ended June 30, 2025.

In connection with the Company's assessment of going concern considerations in accordance with Financial Accounting Standards Board ("FASB") ASC 205-40, Presentation of Financial Statements-Going Concern, management has concluded that there is substantial doubt about its ability to continue as a going concern within one year after the date that the accompanying unaudited condensed consolidated financial statements are issued. The Company's unaudited condensed consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Management's plans relating to the above include raising additional cash through equity and debt financings or other arrangements to fund operations. There can be no assurance that the Company will be able to raise adequate capital under acceptable terms, if at all. The sale of additional equity may dilute existing members and newly issued equity securities may contain senior rights and preferences compared to currently outstanding common stock. Issued debt securities may contain covenants and limit the Company's ability to pay dividends or make other distributions to stockholders. If the Company is unable to obtain such additional financing, future operations would need to be reevaluated.

Cash Flows

The following table summarizes our cash flows for the six months ended June 30, 2025 and 2024:

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Net cash used in operating activities for the six months ended June 30, 2025 increased by $7,871,572 as compared to the six months ended June 30, 2024. The increase in cash used in operating activities is primarily due to the payment of accounts payable of approximately $4,185,902, settlement of amounts due to related parties of $3,427,000, and the non-cash settlement of the TDT payables for the six months ended June 30, 2025 as compared to the same period in the prior year.

Net cash used in investing activities for the six months ended June 30, 2025 decreased by $725,000 as compared to the six months ended June 30, 2024. The decrease in cash used in investing activities is primarily to less issuances of loans to Iris prior to the Business Combination.

Net cash provided by financing activities for the six months ended June 30, 2025 increased by $8,792,762 as compared to the six months ended June 30, 2024. The increase in cash provided by financing activities is primarily due to gross proceeds received of $10,556,500 from the PIPE Financing, offset by $2,563,738 in payments for the transaction costs in connection with the Business Combination. Further, the Company had additional related party debt when comparing the six months ended June 30, 2025 to the six months ended June 30, 2024 of $2,100,000, which is offset by payments of related party debt of $1,300,000 during the six months ended June 30, 2025. No such payments occurred during the six months ended June 30, 2024.

Critical Accounting Policies

The preparation of unaudited condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Making estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. The actual results could materially differ from those estimates.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," that addresses requests for improved income tax disclosures from investors that use the financial statements to make capital allocation decisions. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2024. The amendments in this ASU must be applied on a retrospective basis to all prior periods presented in the financial statements and early adoption is permitted. The Company adopted this standard on January 1, 2025 and determined that the adoption does not have a material impact on these unaudited condensed consolidated financial statements.

Recently Issued Accounting Pronouncements - Not Yet Adopted

On November 4, 2024, the FASB issued ASU 2024-03, Accounting Standards Update 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in this ASU do not change or remove current expense disclosure requirements; however, the amendments affect where such information appears in the notes to financial statements because entities are required to include certain current disclosures in the same tabular format disclosure as the other disaggregation requirements in the amendments. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact that the adoption of this standard will have on its financial statements.