Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q (this "Quarterly Report") and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission (the "SEC") on March 30, 2026. Certain of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled "Risk Factors", in Part I - Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 30, 2026, as updated by the factors described under the heading "Risk Factors" in Part II - Item 1A of this Quarterly Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read the section entitled "Risk Factors" to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see "Cautionary Note Regarding Forward-Looking Statements" below. The events and circumstances reflected in our forward-looking statements may not be achieved or may not occur, and actual results could differ materially from those described in or implied by the forward-looking statements contained in the following discussion and analysis. As a result of these risks, you should not place undue reliance on these forward-looking statements. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Throughout this Quarterly Report, unless the context otherwise requires, the terms "Jasper," "we," "us" and "our" in this Quarterly Report refer to Jasper Therapeutics, Inc. and its consolidated subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report may constitute "forward-looking statements" for purposes of federal securities laws. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and similar expressions (including the negative of any of the foregoing) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

Forward-looking statements in this Quarterly Report may include, for example, but are not limited to, statements about:

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our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future;

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our ability to research, discover and develop additional product candidates;

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the success, cost and timing of our product development activities and clinical trials;

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the potential attributes and benefits and safety and efficacy of our product candidates;

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our ability to obtain and maintain regulatory approval for our product candidates;

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our ability to obtain additional funding for our operations in future offerings;

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our projected financial information, anticipated growth rate and market opportunity;

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our ability to maintain the listing of our public securities on the Nasdaq Capital Market LLC ("Nasdaq");

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our public securities' potential liquidity and trading;

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our success in retaining or recruiting, or changes required in, officers, key employees or directors;

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our ability to grow and manage growth profitably;

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the implementation, market acceptance and success of our business model, developments and projections relating to our competitors and industry;

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our ability to obtain and maintain intellectual property protection and not infringe on the rights of others;

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our ability to identify, in-license or acquire additional technology;

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our ability to maintain our existing license agreements and manufacturing arrangements.

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our expectations regarding the anticipated benefits of our corporate reorganization, including the reduction in force, and our ability to implement and achieve the expected cost savings in connection therewith;

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our ability to continue as a going concern;

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the volatility of the trading price of our common stock;

	●	our ability to successfully integrate the operations and personnel of Kira and realize the anticipated benefits of the Merger;
	●	our ability to obtain stockholder approval for the conversion of the Non-Voting Convertible Preferred Stock and the increase in authorized shares of common stock; and
	●	our expectations regarding the development, clinical timelines and therapeutic potential of KP-104, briquilimab, KP-701 and our other product candidates following the Merger

These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effects. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading "Risk Factors" in Part I - Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 30, 2026, as updated by the factors described under the heading "Risk Factors" in Part II - Item 1A of this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified, and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Overview

Jasper Therapeutics has historically been a clinical-stage biotechnology company focused on developing therapeutics targeting mast cell driven diseases as well as programs in diseases where targeting diseased hematopoietic stem cells can provide benefits. Our lead product candidate, briquilimab, was a monoclonal antibody designed to block stem cell factor ("SCF") from binding to and signaling through the CD117 ("KIT") receptor on mast and stem cells.

Historically, we have evaluated briquilimab in mast cell driven diseases such as Chronic Spontaneous Urticaria (CSU) and Chronic Inducible Urticaria (CIndU), in addition to as a one-time conditioning therapy for severe combined immunodeficiency ("SCID") patients undergoing a second stem cell transplant for which we conducted a Phase 1/2 clinical trial and via Investigator Sponsored Trials ("ISTs") in several other stem cell transplant indications including Fanconi's Anemia.

Kira Acquisition

On July 16, 2026, we acquired Kira Pharmaceuticals ("Kira"), a Cayman Islands exempted company, pursuant to the terms of an Agreement and Plan of Merger, dated July 16, 2026 (the "Merger Agreement"), by and among us, Kira and Kira Holdco Inc., a Delaware corporation and our wholly owned subsidiary ("Merger Sub"). Pursuant to the Merger Agreement, Kira merged with and into Merger Sub, with Merger Sub surviving the merger and becoming our wholly owned subsidiary (the "Merger"). The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes. The consummation of the Merger did not require the approval of our stockholders.

As consideration for the Merger, we issued to the shareholders of Kira an aggregate of 5,195,009 shares of our voting common stock, par value $0.0001 per share (the "Common Stock"), and 4,644,977 shares of our non-voting convertible preferred stock, par value $0.0001 per share (the "Non-Voting Convertible Preferred Stock"), each share of which is convertible into 61 shares of Common Stock, subject to stockholder approval and certain other conditions. In addition, each option to purchase Kira ordinary shares was assumed by us and converted into options to purchase an aggregate of 392,791 shares of Common Stock and an aggregate of 351,201 shares of Non-Voting Convertible Preferred Stock. Shares of Common Stock, options and warrants held by our stockholders immediately prior to the effective time of the Merger remain outstanding and were unaffected by the Merger.

Concurrently with the execution of the Merger Agreement, we entered into a securities purchase agreement with certain investors, pursuant to which we agreed to sell an aggregate of 4,655,951 shares of Non-Voting Convertible Preferred Stock for aggregate gross proceeds of approximately $132.0 million (the "Financing"). The closing of the Financing occurred on July 20, 2026. We have agreed to file a resale registration statement with respect to the shares of Common Stock issuable upon conversion of the shares of Non-Voting Convertible Preferred Stock sold in the Financing within 90 calendar days following the closing of the Financing.

Immediately following the consummation of the Merger, but prior to giving effect to the Financing, our pre-transaction stockholders held approximately 11.27%, and former shareholders of Kira held approximately 88.73%, of our Common Stock, in each case calculated on a fully-diluted basis (without giving effect to any beneficial ownership limitations and assuming the conversion in full of the Non-Voting Convertible Preferred Stock). Following the consummation of the Financing, our pre-transaction stockholders hold approximately 6.68%, former shareholders of Kira hold approximately 49.86%, and the investors in the Financing hold approximately 43.46%, of our Common Stock, calculated on the same basis. As of August 10, 2026, there were 33,274,561 shares of Common Stock and 9,555,390 shares of Non-Voting Convertible Preferred Stock outstanding. If all outstanding shares of Non-Voting Convertible Preferred Stock were converted as of that date, there would be a total of approximately 42,829,951 shares of Common Stock outstanding.

We have agreed to convene a special meeting of our stockholders within 120 days following the closing of the Merger to seek approval of, among other matters, the issuance of shares of Common Stock upon conversion of the Non-Voting Convertible Preferred Stock in accordance with the rules of The Nasdaq Stock Market LLC and an amendment to our certificate of incorporation to increase the number of authorized shares of Common Stock by an amount sufficient to permit the conversion of all Non-Voting Convertible Preferred Stock issued or reserved for issuance pursuant to the Merger Agreement and the securities purchase agreement. On the third business day following receipt of such stockholder approval, each share of Non-Voting Convertible Preferred Stock will automatically convert into shares of Common Stock at a ratio of 61 shares of Common Stock for each share of Non-Voting Convertible Preferred Stock, subject to certain beneficial ownership limitations. If we fail to deliver shares of Common Stock upon conversion of the Non-Voting Convertible Preferred Stock following the earlier of receipt of stockholder approval and the twelve-month anniversary of the initial issuance of the Non-Voting Convertible Preferred Stock, holders of Non-Voting Convertible Preferred Stock may require us to pay cash equal to the fair value of the undelivered shares.

In connection with the Merger, each holder of record of our Common Stock immediately prior to the effective time of the Merger is entitled to receive one contractual contingent value right (a "CVR") for each share of Common Stock held by such holder. Each CVR entitles the holder to receive a pro rata portion of an aggregate $30.0 million payment in the event the U.S. Food and Drug Administration (the "FDA") issues a priority review voucher in connection with briquilimab on or prior to December 31, 2028, payable upon a monetization event or a change of control. The CVRs are not transferable except in limited circumstances, will not be certificated and will not be registered with the Securities and Exchange Commission or listed for trading on any exchange.

Further information regarding the Merger and the Financing can be found in Note 15 - Subsequent Events, included in "Part I, Item 1 - Financial Statements" of this Report.

Following the Merger, we are a clinical-stage biotechnology company focused on advancing a consolidated pipeline of biologic agents designed to improve outcomes in patients with immunologically-driven disorders. Our consolidated pipeline includes KP-104, a bifunctional biologic targeting the treatment of PNH and high unmet need nephrology disorders; briquilimab, an anti-KIT antibody with therapeutic utility across multiple transplant and immunologic indications; KP-701, a dual-acting anti-CD79BxCD32B monoclonal antibody for autoantibody-mediated disorders; and discovery-stage programs in long-acting complement-targeted biologics. Our common stock continues to trade on The Nasdaq Stock Market LLC under the ticker symbol "JSPR."

KP-104 (vensobafusp alfa)

KP-104 is a Phase 2/3 ready, bifunctional biologic targeting both the alternative and terminal pathways within the complement cascade. We believe this dual mechanism addresses both upstream complement activation and downstream lytic damage, and may offer advantages relative to therapies targeting a single complement pathway. KP-104 is being evaluated in an ongoing Phase 2 basket trial in rare renal indications, with initial cohorts in IgA nephropathy ("IgAN") and C3 glomerulopathy ("C3G") and potential expansion into focal segmental glomerulosclerosis ("FSGS") and other renal disorders. We expect to report interim data from Stage 1 of the ongoing Phase 2 basket trial in the fourth quarter of 2026 and updated data in the second quarter of 2027, and we plan to report interim data from Stage 2 of the study in the second quarter of 2027. Based on previous positive data in treatment-naïve PNH, we are planning for an end-of-Phase 2 meeting with the FDA and plan to announce next steps in the first half of 2027. By the end of 2026, we anticipate that we will announce a new indication for KP-104.

Briquilimab

Briquilimab is a targeted aglycosylated anti-KIT monoclonal antibody that blocks stem cell factor ("SCF") from binding to the CD117 ("KIT") receptor, inhibiting an essential survival signal for mast cells and a maintenance signal for hematopoietic stem cells, with therapeutic utility across multiple transplant and immunologic indications. Following positive, long-term data in severe combined immunodeficiency ("SCID"), we are progressing our efforts towards a pre-Biologics License Application ("BLA") meeting with the FDA and expect to announce next steps in the first quarter of 2027. Briquilimab has received Orphan Drug Designation, Fast Track Designation and Rare Pediatric Disease Designation in SCID and, if approved, may be eligible for a priority review voucher. We also continue to assess the mast cell mediated disease landscape and will provide an update on our anticipated clinical development in the second half of 2026.

KP-701

KP-701 is a preclinical, dual-acting anti-CD79BxCD32B monoclonal antibody targeting the B-cell receptor, designed to suppress B-cell function and reduce cytokine and autoantibody production without antibody-dependent cellular cytotoxicity or complement-dependent cytotoxicity, in development for autoantibody-mediated disorders. In the first quarter of 2027, we expect to file a clinical trial application ("CTA") or an investigational new drug application ("IND") for Phase 1 testing, and we plan to report first-in-human data in the third quarter of 2027.

Discovery Programs

We are advancing discovery-stage programs in long-acting complement-targeted biologics for autoimmune inflammatory disorders, with development candidate selection expected in mid-2027.

License and Collaboration Agreements

We have an exclusive license agreement with Amgen for the development and commercialization of the briquilimab monoclonal antibody in all indications and territories worldwide. We also have an exclusive license agreement with Stanford University for the right to use briquilimab in the clearance of diseased stem cells prior to the transplantation of hematopoietic stem cells.

On July 13, 2026, prior to the Merger, Kira entered into a license agreement with Mirador, pursuant to which Kira granted Mirador an exclusive, worldwide, royalty-bearing license, with the right to grant sublicenses, under certain patents and know-how controlled by Kira to develop, manufacture and commercialize products containing Kira's anti-C5a monoclonal antibody (KP-301) and anti-C5aR small molecule compound (KP-402) for all uses and indications. In consideration for the license, Mirador agreed to pay an upfront payment of $12.0 million, and is obligated to pay up to an aggregate of $108.5 million in development and regulatory milestone payments and up to an aggregate of $350.0 million in commercial, net sales-based milestone payments, together with tiered royalties on annual net sales ranging from low to mid-single digits. Out-licensing these assets allows us to focus our resources on our current portfolio of high-value immunology targets.

Financial Operations Overview

We are in the process of evaluating the accounting for the Merger, including whether the transaction constitutes the acquisition of a business or an asset acquisition, the fair values of the assets acquired, and the resulting allocation of the cost of the acquisition. See Note 15 - Subsequent Events.

Concurrent with the execution of the Merger Agreement, we entered into a securities purchase agreement with certain investors, pursuant to which we agreed to sell an aggregate of 4,655,951 shares of Non-Voting Convertible Preferred Stock for aggregate gross proceeds of approximately $132.0 million (the "Financing"). The closing of the Financing occurred on July 20, 2026. We have agreed to file a resale registration statement with respect to the shares of Common Stock issuable upon conversion of the shares of Non-Voting Convertible Preferred Stock sold in the Financing within 90 calendar days following the closing of the Financing, and have agreed to seek a stockholder vote to convert the Non-Voting Convertible Preferred Stock issued in the financing within 120 days from the closing of the Merger. In addition, in the event we are unable to obtain stockholder approval of the conversion of the Non-Voting Convertible Preferred Stock issued in the Financing within 12 months of the closing of the Merger, investors in the Financing have the right to require the Company to repurchase the Non-Voting Convertible Preferred Stock issued in the Financing at the then current fair market value.

We intend to advance our current pipeline and may explore opportunities to in-license or out-license other product candidates. To date, our primary activities have been conducting research and development activities, performing business and financial planning, recruiting personnel and raising capital. We have no products approved for commercial sale and have not generated any revenue from product sales. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through clinical development, seek regulatory approvals, and continue to operate as a public company.

We have incurred significant losses and negative cash flows from operations since our inception. During the three and six months ended June 30, 2026 we incurred net losses of $2.8 million and $3.9 million, respectively. During the three and six months ended June 30, 2025 we incurred net losses of $26.7 million and $48.0 million, respectively. We generated negative operating cash flows of $21.5 million and $38.3 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $320.6 million.

We had cash and cash equivalents of $7.3 million as of June 30, 2026. We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates. We may never achieve profitability, and unless we do and until then, we will need to continue to raise additional capital. Accordingly, based on our current operating plan, and along with our history of operating losses, and given the potential risk of having to repurchase the Non-Voting Convertible Preferred Stock issued in the Financing if we are unable to obtain stockholder approval to convert it to Common Stock within 12 months, our current cash and cash equivalents may not be sufficient to fund our ongoing operations for a period of at least twelve months from the date the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are issued.

Components of Results of Operations

Operating Expenses

Research and Development

The largest component of our total operating expenses since our inception has been research and development activities, including the preclinical and clinical development of our product candidates. Research and development expenses consist primarily of compensation and benefits for research and development employees, including stock-based compensation; expenses incurred under agreements with contract research organizations ("CROs") and investigative sites that conduct preclinical studies and clinical trials; the costs of acquiring and manufacturing clinical trial materials and other supplies; payments under licensing and research and development agreements; other outside services and consulting costs; and facilities, information technology and overhead expenses. Research and development costs are expensed as incurred.

Research and development costs include:

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program costs, including costs incurred under agreements with third-party CROs, CMOs and other third parties;

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employee-related costs, including salaries, benefits and stock-based compensation expense for our research and development personnel; and

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other expenses and allocated overheads incurred in connection with our research and development programs.

We expect our research and development expenses to increase substantially for the foreseeable future as we advance our product candidates into and through preclinical studies and clinical trials, pursue regulatory approval of our product candidates and expand our pipeline of product candidates. The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors, including the safety and efficacy of our product candidates, early clinical data, investment in our clinical programs, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or if, when and to what extent we will generate revenue from the commercialization and sale of our product candidates, if approved.

Our future research and development costs may vary significantly based on factors, such as:

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the scope, rate of progress, expense and results of our discovery and preclinical development activities;

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the costs and timing of our chemistry, manufacturing and controls activities, including fulfilling cGMP-related standards and compliance, and identifying and qualifying suppliers;

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per patient clinical trial costs;

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the number of trials required for approval;

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the number of sites included in our clinical trials;

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the countries in which the trials are conducted;

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delays in adding a sufficient number of trial sites and recruiting suitable patients to participate in our clinical trials;

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the number of patients that participate in the trials;

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the number of doses that patients receive;

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patient drop-out or discontinuation rates;

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potential additional safety monitoring requested by regulatory agencies;

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the duration of patient participation in the trials and follow up;

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the cost and timing of manufacturing our product candidates;

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the phase of development of our product candidates;

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the efficacy and safety profile of our product candidates;

	●	the timing, receipt, and terms of any approvals from applicable regulatory authorities, including the FDA and non-U.S. regulators;
	●	maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates;

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significant and changing government regulation and regulatory guidance;

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changes in the standard of care on which a clinical development plan was based, which may require new or additional trials;

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the extent to which we establish additional strategic collaborations or other arrangements; and

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the impact of any business interruptions to our operations or to those of the third parties with whom we work, particularly in light of geopolitical and macroeconomic trends.

General and Administrative

General and administrative expenses consist primarily of personnel costs and expenses, including salaries, employee benefits, and stock-based compensation for our executive and other administrative personnel; legal services, including relating to intellectual property and corporate matters; accounting, auditing, consulting and tax services; insurance; and facility and other allocated costs not otherwise included in research and development expenses. We expect our general and administrative expenses to increase substantially for the foreseeable future as we anticipate an increase in our personnel headcount to support expansion of research and development activities, as well as to support our operations generally. We also expect to continue to incur significant expenses associated with being a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with applicable Nasdaq and SEC requirements; additional director and officer insurance costs; and investor and public relations costs.

Total Other Income, Net

Total other income, net includes foreign currency transactions gains and losses, interest income, changes in the fair value of warrant liability, reversal of the CIRM grant liability and gain on disposal of property and equipment. Warrant liability was classified as a liability in our condensed consolidated financial statements and was re-measured at each reporting period end.

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 (in thousands, except percentages):

		Three Months Ended June 30,								Change				Change
		2026				2025				$				%
Operating expenses
Research and development		$	5,135			$	21,196			$	(16,061	)			(76	)
General and administrative			4,072				5,880				(1,808	)			(31	)
Total operating expenses			9,207				27,076				(17,869	)			(66	)
Loss from operations			(9,207	)			(27,076	)			17,869				(66	)
Interest income			82				437				(355	)			(81	)
Change in fair value of warrant liability			3,980				-				3,980				100
Other income (expense), net			2,385				(84	)			2,469				NM
Total other income, net			6,447				353				6,094				NM
Net loss and comprehensive loss		$	(2,760	)		$	(26,723	)		$	23,963				(90	)

NM = Not meaningful

Research and Development Expenses

The following table summarizes our research and development expenses for the periods indicated (in thousands, except percentages):

		Three Months Ended June 30,								Change				Change
		2026				2025				$				%
Personnel-related costs		$	851			$	3,909			$	(3,058	)			(78	)
General and overhead costs			700				1,518				(818	)			(54	)
Program costs			3,584				15,769				(12,185	)			(77	)
Total research and development expenses		$	5,135			$	21,196			$	(16,061	)			(76	)

Research and development expenses decreased by $16.1 million, from $21.2 million for the three months ended June 30, 2025 to $5.1 million for the three months ended June 30, 2026.

Personnel-related costs, including employee payroll and related expenses, decreased by $3.1 million, from $3.9 million for the three months ended June 30, 2025 to $0.9 million for the three months ended June 30, 2026, primarily due to the workforce reduction as part of the corporate reorganization in 2025. Stock-based compensation expenses, included in personnel-related costs, decreased by $0.3 million, from $0.5 million for the three months ended June 30, 2025 to $0.2 million for the three months ended June 30, 2026.

General and overhead costs, which include common facilities, human resources and information technology related expenses allocated to research and development, decreased by $0.8 million, from $1.5 million for the three months ended June 30, 2025 to $0.7 million for the three months ended June 30, 2026, primarily due to decreased allocated overheads to research and development costs following our corporate reorganization in 2025.

Program costs decreased by $12.2 million, from $15.8 million for the three months ended June 30, 2025 to $3.6 million for the three months ended June 30, 2026. Clinical program expenses primarily consisted of expenses incurred under agreements with CROs, CMOs, consultants, other professional services, in vivo study costs and lab supplies. Clinical program expenses decreased primarily due to a decrease in CRO expenses of $4.0 million from $5.8 million for the three months ended June 30, 2025 to $1.8 million for the three months ended June 30, 2026, a decrease in CMO expenses of $5.6 million from $6.5 million for the three months ended June 30, 2025 to $0.9 million for the three months ended June 30, 2026, in each case primarily reflecting the impact of our corporate reorganization in 2025, pursuant to which we halted enrollment in our asthma program, discontinued our other clinical and preclinical programs, and narrowed our focus to briquilimab clinical development in chronic urticaria, a decrease in external consulting and other professional services costs of $1.3 million from $2.0 million for the three months ended June 30, 2025 to $0.7 million for the three months ended June 30, 2026, and a decrease in the preclinical in vivo study costs of $0.9 million with no such costs incurred during the three months ended June 30, 2026, as we halted the related preclinical programs in 2025.

Our program costs for the three months ended June 30, 2026 and 2025 were as follows (in thousands):

		Three Months Ended June 30,								Change				Change
		2026				2025				$				%
Briquilimab platform		$	300			$	1,878			$	(1,578	)			(84	)
CMO			943				6,513				(5,570	)			(86	)
CSU			2,047				4,094				(2,047	)			(50	)
Asthma			41				1,926				(1,885	)			(98	)
CIndU			253				828				(575	)			(69	)
SCID			-				368				(368	)			(100	)
MDS/AML			-				162				(162	)			(100	)
Total program costs		$	3,584			$	15,769			$	(12,185	)			(77	)

At the program level, the decrease in clinical program expenses was primarily driven by decreased costs related to the CSU program, asthma program, briquilimab platform and CMO product development and manufacturing expenses not allocated to specific programs. Enrollment in the ETESIAN study for the asthma program, which began in late 2024, was halted in July 2025, and we incurred minimal costs related to this program during the three months ended June 30, 2026. We substantially discontinued the SCID program in 2025 and MDS/AML program in late 2024 and did not incur any costs related to these programs during the three months ended June 30, 2026.

General and Administrative Expenses

General and administrative expenses decreased by $1.8 million, from $5.9 million for the three months ended June 30, 2025 to $4.1 million for the three months ended June 30, 2026. Employee payroll and related expenses decreased by $1.8 million, from $3.1 million for the three months ended June 30, 2025 to $1.3 million for the three months ended June 30, 2026, primarily due to the workforce reduction as part of the corporate reorganization in 2025 and a decrease in stock-based compensation expenses. Stock-based compensation expenses, included in employee payroll and related expenses, were $0.5 million and $1.0 million for the three months ended June 30, 2026 and 2025, respectively. Expenses related to professional services decreased by $0.3 million, from $2.5 million for the three months ended June 30, 2025 to $2.2 million for the three months ended June 30, 2026. Rent expenses decreased by $0.1 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Other expenses increased by $0.4 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily related to an increase in allocation of overhead costs.

Total Other Income, Net

Total other income, net increased by $6.1 million, from $0.4 million for the three months ended June 30, 2025 to $6.5 million for the three months ended June 30, 2026.

Interest income decreased by $0.3 million, from $0.4 million for the three months ended June 30, 2025 to $0.1 million for the three months ended June 30, 2026, primarily due to lower cash balances invested in money market funds.

The change in fair value of warrant liability of $4.0 million for three months ended June 30, 2026 primarily relates to a decrease in the fair value of common stock and the remaining term of warrants issued in connection with our underwritten public offering in September 2025.

Other income (expense), net increased by $2.5 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a gain of $2.3 million from reversal of the CIRM grant liability and a gain of $0.1 million on the disposal of property and equipment related to the sale of certain fully depreciated laboratory equipment during the three months ended June 30, 2026.

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 (in thousands, except percentages):

		Six Months Ended June 30,								Change				Change
		2026				2025				$				%
Operating expenses
Research and development		$	10,949			$	37,353			$	(26,404	)			(71	)
General and administrative			9,210				11,525				(2,315	)			(20	)
Total operating expenses			20,159				48,878				(28,719	)			(59	)
Loss from operations			(20,159	)			(48,878	)			28,719				(59	)
Interest income			246				1,061				(815	)			(77	)
Change in fair value of warrant liability			13,620				-				13,620				100
Other income (expense), net			2,359				(147	)			2,506				NM
Total other income, net			16,225				914				15,311				NM
Net loss and comprehensive loss		$	(3,934	)		$	(47,964	)		$	44,030				(92	)

NM = Not meaningful

Research and Development Expenses

The following table summarizes our research and development expenses for the periods indicated (in thousands, except percentages):

		Six Months Ended June 30,								Change				Change
		2026				2025				$				%
Personnel-related costs		$	2,171			$	8,730			$	(6,559	)			(75	)
General and overhead costs			1,571				3,094				(1,523	)			(49	)
Program costs			7,207				25,529				(18,322	)			(72	)
Total research and development expenses		$	10,949			$	37,353			$	(26,404	)			(71	)

Research and development expenses decreased by $26.4 million, from $37.4 million for the six months ended June 30, 2025 to $11.0 million for the six months ended June 30, 2026.

Personnel-related costs, including employee payroll and related expenses, decreased by $6.6 million, from $8.7 million for the six months ended June 30, 2025 to $2.2 million for the six months ended June 30, 2026, primarily due to the workforce reduction as part of the corporate reorganization in 2025. Stock-based compensation expenses, included in personnel-related costs, decreased by $0.7 million, from $1.1 million for the six months ended June 30, 2025 to $0.4 million for the six months ended June 30, 2026.

General and overhead costs, which include common facilities, human resources and information technology related expenses allocated to research and development, decreased by $1.5 million, from $3.1 million for the six months ended June 30, 2025 to $1.6 million for the six months ended June 30, 2026, primarily due to decreased allocated overheads to research and development costs following our corporate reorganization in 2025.

Program costs decreased by $18.3 million, from $25.5 million for the six months ended June 30, 2025 to $7.2 million for the six months ended June 30, 2026. Clinical program expenses primarily consisted of expenses incurred under agreements with CROs, CMOs, consultants, other professional services, in vivo study costs and lab supplies. Clinical program expenses decreased primarily due to a decrease in CRO expenses of $6.0 million from $9.8 million for the six months ended June 30, 2025 to $3.8 million for the six months ended June 30, 2026, a decrease in CMO expenses of $6.9 million from $8.7 million for the six months ended June 30, 2025 to $1.8 million for the six months ended June 30, 2026, in each case primarily reflecting the impact of our corporate reorganization in 2025, pursuant to which we halted enrollment in our asthma program, discontinued our other clinical and preclinical programs, and narrowed our focus to briquilimab clinical development in chronic urticaria, a decrease in external consulting and other professional services costs of $2.4 million from $3.7 million for the six months ended June 30, 2025 to $1.3 million for the six months ended June 30, 2026, a decrease in the preclinical in vivo study costs of $1.7 million with no such costs incurred during the six months ended June 30, 2026, as we halted the related preclinical programs in 2025.

Our program costs for the six months ended June 30, 2026 and 2025 were as follows (in thousands):

		Six Months Ended June 30,								Change				Change
		2026				2025				$				%
Briquilimab platform		$	566			$	3,835			$	(3,269	)			(85	)
CMO			1,825				8,651				(6,826	)			(79	)
CSU			4,425				6,840				(2,415	)			(35	)
Asthma			(286	)			3,319				(3,605	)			(109	)
CIndU			677				1,713				(1,036	)			(60	)
SCID			-				891				(891	)			(100	)
MDS/AML			-				280				(280	)			(100	)
Total program costs		$	7,207			$	25,529			$	(18,322	)			(72	)

At the program level, the decrease in clinical program expenses was primarily driven by decreased costs related to the asthma program, CSU and CIndU programs, briquilimab platform and CMO product development and manufacturing expenses not allocated to specific programs. The decrease in CSU and CIndU programs, briquilimab platform and CMO product development and manufacturing expenses not allocated to specific programs was primarily due to lower overall program activity and spending following our 2025 corporate reorganization, as we continue to prioritize our cash resources. Enrollment in the ETESIAN study for the asthma program, which began in late 2024, was halted in July 2025. The decrease in asthma program expenses during the six months ended June 30, 2026 was further impacted by reductions in previously accrued CRO investigator grant costs following the reconciliation and close-out of the study. We do not expect to incur significant costs related to asthma program in future. There were no expenses incurred related to the SCID and MDS/AML programs that we discontinued in prior periods.

General and Administrative Expenses

General and administrative expenses decreased by $2.3 million, from $11.5 million for the six months ended June 30, 2025 to $9.2 million for the six months ended June 30, 2026. Employee payroll and related expenses decreased by $2.5 million, from $6.4 million for the six months ended June 30, 2025 to $3.9 million for the six months ended June 30, 2026, primarily due to the workforce reduction as part of the corporate reorganization in 2025 and a decrease in stock-based compensation expenses. Stock-based compensation expenses, included in employee payroll and related expenses, were $0.6 million and $2.0 million for the six months ended June 30, 2026 and 2025, respectively. Expenses related to professional services decreased by $0.4 million, from $4.5 million for the six months ended June 30, 2025 to $4.1 million for the six months ended June 30, 2026, primarily due to a $0.4 million decrease in stock-based compensation expense related to non-employee consultants. Rent expenses decreased by $0.2 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. Other expenses increased by $0.8 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily related to an increase in allocation of overhead costs.

Total Other Income, Net

Total other income, net increased by $15.3 million, from $0.9 million for the six months ended June 30, 2025 to $16.2 million for the six months ended June 30, 2026.

Interest income decreased by $0.8 million, from $1.0 million for the six months ended June 30, 2025 to $0.2 million for the six months ended June 30, 2026, primarily due to lower cash balances invested in money market funds.

The change in fair value of warrant liability of $13.6 million for six months ended June 30, 2026 primarily relates to a decrease in the fair value of common stock and the remaining term of warrants issued in connection with our underwritten public offering in September 2025.

Other income increased by $2.5 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a gain of $2.3 million from reversal of the CIRM grant liability, a gain of $0.1 million on the disposal of property and equipment related to the sale of certain fully depreciated laboratory equipment during the six months ended June 30, 2026, and a decrease in foreign currency transactions losses of $0.1 for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Liquidity and Capital Resources

As of June 30, 2026, we had $7.3 million of cash and cash equivalents.

In order to assist in funding our future operations, including our planned clinical trials, on March 19, 2025, we filed a new universal shelf registration statement on Form S-3 (the "Shelf Registration Statement") with the SEC, which was declared effective on March 26, 2025 and superseded our prior universal shelf registration statement. As of June 30, 2026, we can sell from time to time up to $263.5 million of common stock, preferred stock, debt securities, warrants, rights, units and depositary shares comprised of any combination of these securities, for our own account in one or more offerings under the Shelf Registration Statement. The terms of any offering under the Shelf Registration Statement will be established at the time of such offering and will be described in a prospectus supplement to the Shelf Registration Statement filed with the SEC prior to the completion of any such offering. However, as of June 30, 2026, the aggregate market value of our common stock held by non-affiliates ("public float") is less than $75.0 million, so the amount we can raise through primary public offerings of securities, including through the ATM offering, in any twelve-month period using shelf registration statements is limited to an aggregate of one-third of our public float. On March 19, 2025, we entered into an Open Market Sale Agreement^SM with Jefferies LLC ("Jefferies"), pursuant to which we may offer and sell through or to Jefferies, as sales agent or principal, shares of common stock from time to time (the "ATM Offering"). On March 26, 2025, we filed with the SEC a prospectus under the S-3 in connection with the ATM Offering (the "ATM Prospectus"), pursuant to which we may offer and sell shares of common stock having an aggregate offering price of up to $100.0 million. As of June 30, 2026, we issued and sold an aggregate of 1,231,447 shares of common stock for net proceeds of approximately $6.5 million pursuant to the ATM Prospectus.

On September 18, 2025, we entered into an underwriting agreement with TD Securities (USA) LLC as the representative of the several underwriters named therein, relating to an underwritten public offering under the Shelf Registration Statement. On September 22, 2025, we closed the offering and issued an aggregate of 11,670,707 shares of common stock, pre-funded warrants to purchase 675,000 shares of common stock and common stock warrants to purchase 12,345,707 shares of common stock, for net proceeds of approximately $27.5 million.

As of June 30, 2026, $93.5 million remains allocated and available under the ATM Prospectus and $170.0 million remains available and unallocated under the Shelf Registration Statement.

In connection with the Kira acquisition, as discussed above, we received approximately $132.0 million gross proceeds on July 20, 2026 from the issuance of 4,655,951 shares of non-voting convertible preferred stock to investors.

Future Funding Requirements

Our primary uses of cash are to fund our operations, which consist primarily of research and development expenditures related to our programs and, to a lesser extent, general and administrative expenditures. We anticipate that we will continue to incur significant expenses for the foreseeable future as we continue to advance our product candidates, expand our corporate infrastructure, operate as a public company, further our research and development initiatives for our product candidates, scale our laboratory and manufacturing operations, and incur marketing costs associated with potential commercialization. We are subject to all the risks typically related to the development of new drug candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial additional funding in connection with our continuing operations.

We have incurred significant losses and negative cash flows from operations since our inception. As of June 30, 2026, we had an accumulated deficit of $320.6 million. Given our recurring losses from operations and negative cash flows, the potential risk of having to repurchase the Non-Voting Convertible Preferred Stock issued in the Financing if we are unable to obtain stockholder approval to convert it to Common Stock within 12 months and based on our current operating plan, we have concluded that there is substantial doubt about our ability to continue as a going concern within one year from the date of filing of this Quarterly Report. We expect to finance our future cash needs through equity or debt financings, collaborations or a combination of these approaches, and given the imminent need for additional funding to continue to fund operations in the near-term, we are actively seeking additional capital to extend our cash runway. The sale of equity or convertible debt securities may result in dilution to our stockholders, and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. Debt financings may subject us to covenant limitations or restrictions on our ability to take specific actions, such as incurring additional debt or making capital expenditures. Our ability to raise additional funds may be adversely impacted by negative global economic conditions and any disruptions to and volatility in the credit and financial markets in the United States and worldwide or other factors. There can be no assurance that we will be successful in acquiring additional funding at levels sufficient to fund our operations or on terms favorable or acceptable to us. While we routinely evaluate cost reduction measures to proactively manage cash burn, if we are unable to obtain adequate financing when needed or on terms favorable or acceptable to us, we may be forced to take broader actions such as to delay, reduce the scope of or eliminate one or more of our research and development programs.

Our future financing requirements will depend on many factors, including:

●

the timing, scope, progress, results and costs of research and development, preclinical and non-clinical studies and clinical trials for our current and future product candidates;

●

the number, scope and duration of clinical trials required for regulatory approval of our current and future product candidates;

●

the outcome, timing and costs of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities for our product candidates, including any requirement to conduct additional studies or generate additional data beyond that which we currently expect would be required to support a marketing application;

●

the costs of manufacturing clinical and commercial supplies of our current and future product candidates;

●

the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;

●

any product liability or other lawsuits related to our product candidates;

●

the revenue, if any, received from commercial sales of any product candidates for which we may receive marketing approval;

●

our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payers;

●

the costs to establish, maintain, expand, enforce and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing our patents or other intellectual property rights;

●

expenses incurred to attract, hire and retain skilled personnel; and

●

the costs of operating as a public company.

A change in the outcome of any of these or other variables could significantly change the costs and timing associated with the development of our product candidates. Furthermore, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such change.

Contractual Obligations and Commitments

We enter into contracts in the normal course of business with CROs for clinical trials, with CMOs for clinical supplies manufacturing and with other vendors for preclinical studies, supplies and other services and products for operating purposes. These contracts generally provide for termination on notice or may have a potential termination fee if a purchase order is cancelled within a specified time, and therefore are cancelable contracts. We do not expect any such contract terminations and did not have any non-cancellable obligations under these agreements as of June 30, 2026.

Leases

As of June 30, 2026, we leased approximately 25,900 square feet of space for our headquarters in Redwood City, California. The lease expires in August 2026. We have an option to extend the term for an additional five years to August 2031. In addition to base rent, we pay our share of operating expenses and taxes. As of June 30, 2026, our rent commitments under the lease agreement were $0.3 million within the next 12 months from June 30, 2026.

Stanford License Agreements

In March 2021, we entered into an exclusive license agreement with Stanford (the "2021 Stanford License Agreement"). In July 2023, we entered into an amendment to the 2021 Stanford License Agreement to modify certain milestones set forth thereunder. Pursuant to the 2021 Stanford License Agreement we are required to pay annual license maintenance fees, beginning on the first anniversary of the effective date of the agreement and ending upon the first commercial sale of a product, method, or service in the licensed field of use, as follows: $25,000 for each first and second year, $35,000 for each third and fourth year, and $50,000 at each anniversary thereafter ending upon the first commercial sale. We are also obligated to pay late-stage clinical development milestone payments and first commercial sales milestone payments of up to $9.0 million in total. We will also pay low single-digit royalties on net sales of licensed products. All products were in development as of June 30, 2025, and no such royalties were due as of such date and no milestones were achieved.

In December 2024, we entered into a co-exclusive license agreement with Stanford (the "2024 Stanford License Agreement"). Pursuant to the 2024 Stanford License Agreement, we are required to pay a license issuance fee of $75,000, which was paid in January 2025, and annual license maintenance fees, beginning on the first anniversary of the effective date of the agreement: $25,000 for each of the first through third years, $50,000 for each of the fourth through sixth years and $65,000 at each anniversary thereafter. We are also obligated to pay clinical development milestone payments of up to $1.3 million and sales milestone payments of up to $7.0 million in total. We will also pay low single-digit royalties on net sales of licensed products. All products are in development as of June 30, 2025, and no such royalties were due as of such date and no milestones were achieved.

Cash Flows

The following table summarizes our sources and uses of cash for the periods presented (in thousands):

		Six Months ended June 30,
		2026				2025
Net cash used in operating activities		$	(21,467	)		$	(38,295	)
Net cash provided by investing activities			80				5
Net cash provided by financing activities			9				6,163
Net decrease in cash and cash equivalents and restricted cash		$	(21,378	)		$	(32,127	)

Cash Flows from Operating Activities

Net cash used in operating activities was $21.5 million and $38.3 million for the six months ended June 30, 2026 and 2025, respectively.

Cash used in operating activities in the six months ended June 30, 2026 was primarily due to our net loss for the period of $3.9 million, net change of non-cash items totaling $14.4 million and net change of $3.2 million in our net operating assets and liabilities. The non-cash items primarily consisted of change in fair value of warrant liability of $13.6 million, gain on reversal of CIRM grant liability of $2.3 million and gain on disposal of property and equipment of $0.1 million, partially offset by $1.2 million related to stock-based compensation expense and $0.4 million of non-cash lease expense. The changes in our net operating assets and liabilities were primarily due to a decrease of $3.4 million in accounts payable, a decrease of $1.4 million in accrued expenses and other current liabilities, a decrease of $1.0 million in the operating lease liability, partially offset by a decrease of $2.6 million in prepaid expenses and other current assets.

Cash used in operating activities in the six months ended June 30, 2025 was primarily due to our net loss for the period of $48.0 million partially offset by non-cash items totaling $4.7 million and a net change of $5.0 million in our net operating assets and liabilities. The non-cash items primarily consisted of $3.6 million related to stock-based compensation expense, $0.5 million related to depreciation and amortization expense and $0.5 million of non-cash lease expense. The changes in our net operating assets and liabilities were primarily due to an increase of $4.0 million in accounts payable, a decrease of $0.7 million in prepaid expenses and other current assets, a decrease of $0.6 million in other non-current assets and an increase of $0.4 million in accrued expenses and other current liabilities, partially offset by a decrease of $0.8 million in operating lease liability.

Cash Flows from Investing Activities

Cash provided by investing activities was $0.1 million for the six months ended June 30, 2026, which consisted of proceeds from sales of property and equipment.

Cash provided by investing activities was less than $0.1 million for the six months ended June 30, 2025, which primarily consisted of proceeds from sales of property and equipment.

Cash Flows from Financing Activities

Cash provided by financing activities for the six months ended June 30, 2026 was less than $0.1 million, which consisted of proceeds from issuance of common stock pursuant to our employee stock purchase plan.

Cash provided by financing activities for the six months ended June 30, 2025 was $6.2 million, which consisted of net proceeds from the issuance and sale of shares of common stock under the ATM Offering of $5.9 million and proceeds from issuance of common stock pursuant to our employee stock purchase plan of $0.2 million.

Critical Accounting Policies and Significant Judgments and Estimates

Our critical accounting policies are disclosed in Note 2 to the condensed consolidated financial statements included in Part I - Item 1 of this Quarterly Report and Note 2 to the condensed consolidated financial statements included in Part II - Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 30, 2026. There have been no material changes to our significant accounting policies since the date of issuance of our consolidated financial statements for the year ended December 31, 2025.

Recently Issued Accounting Pronouncements

See Note 2 to the condensed consolidated financial statements included in Part I - Item 1 of this Quarterly Report for more information regarding recently issued accounting pronouncements.

Smaller Reporting Company Status

We are a "smaller reporting company," as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates exceeds $250 million as of the last business day of our second fiscal quarter, or (ii) our annual revenue exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the last business day of our second fiscal quarter.